UK Government’s Borrowing Rises to £14.9bn in October

UK Government’s borrowing in October was higher than expected at £14.9bn, largely pushed up by higher benefit payments, official figures have shown.

But the figures showed a smaller-than-expected deficit across the first half of the financial year.

This was due to higher tax receipts in previous months, reflecting higher wages and inflation.

It comes as speculation mounts that there could be tax cuts in the chancellor’s Autumn Statement on Wednesday.

Spending on cost of living payments and higher interest on public debt – the biggest of any October since monthly records began – meant the public finances saw a bigger shortfall than at the same point last year.

Borrowing was up £4.4bn from a year earlier and the second highest figure for October, behind only 2020’s figure when spending was affected by the pandemic.

The borrowing figure – the difference between spending and tax income – was also higher than the £13.7bn forecast by the UK’s independent fiscal watchdog, the Office for Budget Responsibility (OBR).

It was the first time borrowing has surpassed the OBR’s predictions this financial year.

But better-than-expected tax receipts earlier in the financial year have resulted in a smaller deficit overall than the OBR forecast at the time of the spring Budget.

The ONS said the government had borrowed £98.3bn in total since the start of the financial year. That is £21.9bn more than a year earlier, but less than the £115.2bn that was forecast by the OBR in March.

Responding to the latest borrowing statistics, Chancellor Jeremy Hunt said he would continue to support the Bank of England to drive inflation – the rate at which prices rise – down to 2%.

“That means being responsible with the nation’s finances,” he added.

Bank of England governor Andrew Bailey told MPs on the Treasury Committee on Tuesday that inflation was on track to get back to the Bank’s target of 2%.

However, he warned it would take time for the target to be hit, and there were risks inflation could remain high.