Post-Budget Borrowing Hits 2nd Highest October Figure Since 1993

Government borrowing rose to £17.4 billion last month, marking the second highest October figure since monthly records began.
The difference between public sector spending and income in October was £1.6 billion higher than the same time last year, official data showed.
“This month’s borrowing was the second highest October figure since monthly records began in January 1993,” said Jessica Barnaby, the deputy director for public sector finances at the Office for National Statistics (ONS).
The ONS data, published on Thursday, are the first reports on government borrowing after the October Budget, which included significant spending measures.
The ONS said that tax receipts also recorded growth, to £61.3 billion, driven by increases in corporation and income taxes and slight growth in VAT receipts.
“However, with spending on public services, benefits and debt interest costs all up on last year, expenditure rose faster than revenue overall,” Barnaby said.
Central government’s total expenditure last month was £88.5 billion, £3.9 billion more than the same month in 2023. According to the ONS, current expenditure data are provisional and will be more detailed when further information by government departments comes in later in the year.
The increase in spending was brought on by higher departmental spending on goods and services, day-to-day running of local government, net social benefits paid, and interest payable on government debt.
Looking at how much the government borrowed in the first seven months of the financial year, the ONS said the bill totalled £96.6 billion.
“Despite raising day-to-day spending significantly this year and next, spending is set to rise by just 1.3 percent in real terms on average between 2026–27 and 2029–30.
“And given that the chancellor only had £9.9 billion of fiscal headroom against her fiscal mandate left over after October’s Budget, this suggests that if she does want to increase day-to-day spending further, taxes will probably need to rise too,” he added.
The £9.9 billion in headroom is small by historical standards and is around a third of the £28 billion average that Reeves’s predecessors held against their rules since 2010.
The UK’s public debt, excluding state ownership in banks, was estimated at 97.5 percent of GDP at the end of last month. The ONS said that the level of debt remains at levels last seen in the early 1960s.
Labour has pledged to reduce debt and deliver growth by prioritising investment.
Chief Secretary to the Treasury Darren Jones said, “This government will never play fast and loose with the public finances.”
However, government outflows are unlikely to fall anytime soon with the Budget expected to increase spending by £70 billion per year over the next five years.
The OBR anticipates that two-thirds of this will go on day-to-day spending and one third on investment.
In her fiscal plan, Reeves increased taxation by about £40 billion a year, citing a “£22 billion black hole” inherited from the Conservative government as the reason for the measures.
The Centre for Policy Studies Director Robert Colvile has suggested that tax hikes will impact investment confidence in Britain and send “a powerful anti-growth message to overseas investors.”