UK Borrowing Hits Record; Reeves Faces Fiscal Test

UK government borrowing for the year to March reached £151.9 billion, exceeding forecasts by £14.6 billion and marking the third-highest annual deficit on record. The overshoot was driven by increased spending on pay, benefits, and inflation-related costs, despite improved tax receipts. Public sector net debt has risen to 95.8% of GDP, a level last seen in the early 1960s, raising concerns among bond markets and policymakers about the sustainability of public finances. The International Monetary Fund has downgraded the UK's economic growth outlook, partly attributing this to global trade tensions, including US tariffs. Economists warn that further tax rises or spending cuts may be required in the Autumn Budget to maintain fiscal discipline. Chancellor Rachel Reeves and Treasury officials have reaffirmed their commitment to fiscal rules and continued efforts to reduce government waste.