Government borrowing rises above forecasts to £24.5bn ahead of Budget

UK government borrowing rose by more than expected to £24.5 billion for last month, underscoring the constraints in the public finances ahead of the Chancellor’s Budget next week.

The Office for National Statistics (ONS) reported that public sector net borrowing increased by £1.8 billion compared with the same month last year.

It comes only a week ahead of Chancellor John Healey’s first Budget, where he is expected to increase bank taxes as higher borrowing costs weigh down on fiscal headroom.

ONS chief economist Grant Fitzner said: “Borrowing in the first six months of the current financial year remained below the same period last year, thanks to higher receipts, although it was still above the official forecast.

“Preliminary figures suggest that although debt in cash terms continues to rise, as a proportion of GDP it has fallen over the year.

“On this latter basis it remains at levels last seen in the early 1960s.”