By Chris Dorrell
The government borrowed more than expected in February, but borrowing in the financial year was still on track to be its lowest for four years.
According to figures from the Office for National Statistics (ONS), the government borrowed £8.4bn in February compared to the roughly £6bn expected by economists.
February’s figure was £3.4bn lower than last year’s, making it the fourth consecutive month in which borrowing was lower than the year before.
In the financial year to February 2024, borrowing was £106.8bn, the lowest nominal total for four years. The Office for Budget Responsibility has forecast borrowing will settle at £114.1bn for the financial year.
Public sector debt was estimated at around 97.1 per cent of GDP, which was 2.3 percentage points higher than a year earlier. National debt stands at levels last seen in the early 1960s.
The public finances figures are closely watched to assess how much space the Chancellor will have to cut taxes if he announces a pre-election fiscal event.
The government is in a very tight fiscal position. A high debt burden and a growing debt interest bill have put pressure on other areas of public spending.
After the policies announced in the Spring Budget, Hunt had a buffer of just £8.9bn to meet his key fiscal rule of getting debt to fall in five years.
However, he is determined to set the UK on a path to lower taxes. According to the OECD, the UK’s total tax-to-GDP ratio hit 35.3 per cent in the 2023 financial year, the highest since its records began in 2000.
