UK government borrowing falls to £11.6bn in December | Government borrowing
The UK government borrowed less than expected in December after receiving stronger revenues than a year ago, official figures show.
The Office for National Statistics said public sector net borrowing (the difference between spending and income) was £11.6bn last month, compared to £18.7bn in the same month last year.
Economists polled by Reuters had expected borrowing in December to be £13bn. The figure is closely watched by the City as it shows how much the government has borrowed to fund its spending plans and whether it has exceeded its target for the year.
Borrowing in the financial year to December was £140.4bn, down £300m on the same period last year. Borrowing in previous months of the year was also revised downwards by a total of £3.5bn.
Tom Davies, a senior statistician at the ONS, said: “Borrowing in December was significantly reduced compared to the same month in 2024, with the result that revenues are rising strongly compared to last year while spending is only slightly higher.”
Chancellor Rachel Reeves has made it a priority to reduce government borrowing, particularly because the burden on debt is currently so high that £1 in every £10 spent goes towards debt interest.
ONS figures show interest costs accounted for £9.1 billion of the £11.6 billion of net government borrowing in December.
Dennis Tatarkov, senior economist at KPMG UK, said this situation was likely to ease in the coming months. ““With interest rate cuts expected later this year and the end of the Bank of England’s monetary tightening program on the horizon, the Treasury could see a significant fall in borrowing costs, potentially creating more room for public spending,” he said.
Reeves announced a £26bn tax increase in the autumn budget in November to offset increased government spending on public services and improving the country’s infrastructure. The chancellor introduced a fiscal rule requiring the government to fund daily expenditure through taxes until the end of parliament.
The Office for Budget Responsibility, the UK’s official forecaster, said in a November report that Reeves’ tax increases had created a £22 billion gap in spending against this fiscal rule.
The OBR predicts that public sector net borrowing for the financial year will fall to £138bn from £152.6bn the previous year, with the deficit falling to 4.5% of gross domestic product from 5.2% in 2024-25. Debt will decrease every year, reaching £67 billion by 2031.
James Murray, chief secretary to the Treasury, said: “We doubled our share last year and are expected to reduce borrowing by more than any other G7 country; borrowing this year will be at the lowest level since before the pandemic. “It can’t be right that £1 in every £10 we spend goes on debt interest – which could be better spent on our nurses, police officers and teachers – so we’re tackling this.
“We are stabilizing the economy, reducing debt, rooting out waste in the public sector and ensuring public services provide value for taxpayers’ money.”
