UK borrowing jumps to £23.3bn as finance warning grows

UK borrowing rose to £23.3bn in May, nearly a third higher than a year earlier, adding pressure as debt interest and spending climbed.

The UK borrowed £23.3bn in May, official figures showed, nearly a third more than in the same month last year and well above the forecast from the government’s fiscal watchdog.

The figure, which measures the gap between public spending and tax income, was £5.6bn higher than the Office for Budget Responsibility had expected in March. The overshoot sharpened warnings that the public finances remain under strain as debt costs, public services, investment and benefits spending all rose.

The Office for National Statistics said interest payable on government debt reached £11.7bn, the highest amount recorded for any May. ONS statistician Tom Davies said the rise in spending compared with last May outweighed higher tax receipts.

Ruth Gregory, deputy chief UK economist at Capital Economics, said: “The big picture is that the public finances are fragile.” She said the position would constrain whoever is prime minister.

The OBR forecast was made before the wider economic effects of the war in the Middle East had become clear. Analysts cited higher inflation as a major factor behind the increase in borrowing costs, with oil-price pressures expected to add to inflation in the coming months.

The figures came a day after the Bank of England held interest rates, weighing a sluggish jobs market against expectations of further inflation pressure. Long-term borrowing costs are also being watched closely amid political uncertainty, including the prospect of a Labour leadership challenge after Greater Manchester mayor Andy Burnham was elected MP for Makerfield in a by-election.

Chief Secretary to the Treasury Lucy Rigby said the war in the Middle East had affected economies globally, adding that the government had “the right economic plan” to protect households and businesses from rising costs while cutting borrowing. Shadow chancellor Mel Stride said borrowing was “out of control” and argued that spending, particularly on welfare, needed to be brought under control.

Separate official figures showed retail spending rose by 1.2% in May, helped by unseasonably good weather, promotions and stronger sales of items such as outdoor furniture and fans. But the borrowing data keeps the focus on inflation, debt interest and the fiscal room available to the government in the months ahead.