Worse than expected government borrowing serves as a reminder to the new Chancellor of the fiscal challenges ahead 19 July 2024 Higher spending has left government borrowing £3.2 billion higher than the OBR’s last forecast three months into the new financial year, highlighting the scale of the fiscal challenge facing the new Chancellor ahead of her first Budget this Autumn, the Resolution Foundation said today (Friday). The latest ONS data showed that borrowing was £14.5 billion in June – down on last year, but up £2.9 billion compared to the OBR’s last economic outlook back in March. Three months into the new financial year, borrowing is now £3.2 billion higher than forecast, driven by spending running £4.7 billion higher than forecast (driven by spending on goods and services such as procurement and public sector pay). Tax receipts were stronger than forecast in June, but remain £1.7 billion lower than forecast for the year to date. The Foundation adds that borrowing for the last financial year (2023-24) was also £8 billion higher than the OBR forecast. Cara Pacitti, Senior Economist at the Resolution Foundation, said: “Weaker than expected borrowing so far this year will serve as a reminder to the new Chancellor of the huge fiscal challenge she faces ahead of her first Budget this Autumn. The fiscal inheritance facing Rachel Reeves is one rising taxes, falling spending for many public services, and very little wriggle if bad economic news materialises. And data this week on inflation, jobs and government borrowing have not been encouraging.”
