Displaying items by tag: borrowing

Rachel Reeves has dismissed claims that she faces a £50 billion 'black hole' in the public finances. She insisted that reports about massive funding gaps were exaggerated, saying many commentators were 'talking rubbish'. Concerns rose this week as long-term government borrowing costs hit a 27-year high, sparking fears of tax hikes or spending cuts ahead of the 26 November Budget. Reeves emphasised her commitment to two borrowing rules: that day-to-day spending must be funded from tax income by 2029–30, and that debt must fall as a share of national income within this parliament. While she ruled out tax rises on VAT, National Insurance, and income tax for working people, speculation continues over possibly targeting property, banks, and other sectors. She rejected talk of an IMF bailout, and promised to strike a balance between funding public services - particularly the NHS - and encouraging growth, saying there are already 'positive signs' in the economy. See https://news.sky.com/story/interest-rates-considerably-more-doubt-over-future-cuts-bank-of-england-governor-warns-13424292

The Government borrowed £151.9 billion in the year to March, up £20.7 billion from the previous year, raising concerns about the nation’s financial stability. The figures, revealed as Rachel Reeves visits Washington to negotiate a trade deal with the USA, come amid mounting pressure to cut public spending or increase taxes in order to meet her strict borrowing rules. Reeves has insisted that borrowing will not fund daily spending, but economists warn that sluggish growth, rising interest rates, and looming US tariffs could force her hand. Economists predict tax hikes may be necessary, especially if a trade agreement with the USA cannot be reached. Meanwhile, the IMF downgraded the UK’s 2025 growth forecast from 1.6% to 1.1%, citing inflation, borrowing costs, and trade disruptions. Despite higher tax revenues, debt interest rose to £4.3 billion in March, the highest since the 1960s. Both political and economic leaders are scrutinising every area of government spending, while critics blame the borrowing spike on poor fiscal management and short-sighted policies.

The British pound has dropped to its lowest level in nine months, following a rise in UK ten-year borrowing costs to their highest point since 2008. These elevated costs could lead to tax increases or spending cuts as the UK government works to meet borrowing targets. The Government, awaiting forecasts from the Office for Budget Responsibility (OBR) in March, emphasised the importance of stable public finances for economic growth. Opposition figures criticised current borrowing strategies, with some calling for more fiscal discipline to build resilience. Globally, rising borrowing costs, partly influenced by uncertainty surrounding Donald Trump’s proposed tariffs, have contributed to inflation concerns and investor unease. Experts warn these trends could disrupt investment promises and necessitate recalibrated spending plans.