The UK borrows more than expected in December

Unlock Editor’s Digest for free

FT Editor Roula Khalaf selects her favorite stories in this weekly newsletter.

The UK government borrowed more than expected in December, underscoring the challenge to Chancellor Rachel Reeves as she tries to restore confidence in her fiscal plans and kickstart growth.

Borrowing – the difference between public sector spending and income – was £17.8 billion last month, £10.1 billion more than in December 2023 and the highest December borrowing for four years, the data from the Office of National Statistics showed on Wednesday.

It was also above the £14.1bn forecast by economists polled by Reuters, and compared to the £14.6bn forecast by the Office for Budget Responsibility, the UK’s fiscal watchdog.

In the first nine months of the fiscal year, borrowing was £129.9 billion, £8.9 billion more than in the same period in 2023, the second highest borrowing since the financial year to December from when the monthly records began in January 1993 and higher than the loan. £125.9 billion expected by the OBR.

Reeves sought to reassure investors after the UK’s borrowing costs this month rose to the highest level since the global financial crisis, threatening its ability to meet a self-imposed tax rule in which everyday spending is covered by tax receipts.

Borrowing costs in the UK have fallen since last week’s figures showed inflation unexpectedly slowed in December, and a global bond sell-off eased.

But the government remains under pressure to turn around the economy, which grew just 0.1 percent in November after moderate contractions in September and October.

This is a developing story