UK govt March borrowing comes in higher-than-expected

23rd Apr 2024 07:22

(Sharecast News) - UK government borrowing overshot forecasts in March, producing a budget deficit that was £6.6bn higher than expected, official data revealed on Tuesday, damaging plans for a pre-election tax cut by Finance Minister Jeremy Hunt.

Public sector net borrowing, excluding state-controlled banks, came in at £12bn in March, the Office for National Statistics said. This was above expectations of around £10bn.

Borrowing in the financial year ending March 2024 was provisionally estimated at £120.7bn, down £7.6bn than a year ago, but £6.6bn more than forecast by the Office for Budget Responsibility (OBR).

Public sector net debt excluding public sector banks at the end of March 2024 was provisionally estimated at 98.3% of GDP; 2.6 percentage points more than at the end of March 2023, and remains at levels last seen in the early 1960s, the ONS said.

''This snapshot of the UK's public finances gives Jeremy Hunt even less opportunity to offer a windfall of tax breaks ahead of the General Election," said Susannah Streeter, head of money and markets at Hargreaves Lansdown.

"The magic money tree is increasingly thirsty, stuck in a drought caused by increased spending on public services and benefits. Although the amount borrowed dropped sharply compared to last March, on a 12-month basis the picture is less pretty."

"Although tax receipts came in higher than last March, and there were large reductions in energy support scheme costs, and the amount of interest due on the debt, this situation looks set to deteriorate. Fewer interest rate cuts are now priced in by financial markets, which is likely to raise expectations about the costs of borrowing for the government."

"Hunt has been reportedly mulling plans to cut National Insurance for this third time in a row this year and raising the threshold for stamp duty. But he's balancing on an increasingly precarious branch as he tries to shake down treats for voters.''

Reporting by Frank Prenesti for Sharecast.com