Government borrowing exceeded market expectations in November, according to new figures, reflecting mounting pressure on the economy ahead of the Chancellor’s Autumn Budget.
Data from the Office for National Statistics (ONS) showed public-sector net borrowing reached £11.7bn last month. While this was £1.9bn lower than in November a year earlier, it still came in above City forecasts of a £10bn deficit. Public-sector net borrowing measures the gap between government spending and income.
The ONS said November’s figure was the lowest for that month in four years, despite higher overall spending. They attributed the improvement primarily to stronger tax and national insurance receipts. However, borrowing for the financial year to November totalled £132.3bn, £10bn more than over the same eight-month period last year, making it the second-highest on record after 2020 during the Covid pandemic.
The figures were published a day after the Bank of England cut interest rates for the sixth time since August last year, offering some relief to borrowers and a modest boost to an economy that has struggled to gain momentum.
Economic activity slowed in the run-up to the Budget on 26 November, as uncertainty over tax changes dampened consumer spending and business investment. Official data showed gross domestic product (GDP) contracted unexpectedly in October, with the Bank of England forecasting flat growth in the final quarter of the year.
Chancellor Rachel Reeves used the Budget to increase headroom against her main fiscal rule to £22bn. Revenues from compulsory social contributions rose sharply following April’s increase in employer national insurance rates, while spending pressures remained elevated, including higher benefit payments and increased public investment.
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