UK Borrowing Surges to £17.4 Billion in October

In October, UK government borrowing surged to £17.4 billion, marking the second highest October figure since records began in 1993, significantly exceeding the £13.3 billion forecast by economists. The increase was driven by rising debt interest costs, which hit a record £9.1 billion, and public sector pay rises implemented by the new Labour government. Despite tax revenue growth, spending on public services, benefits, and debt servicing outpaced revenue, exacerbating the fiscal deficit. The borrowing figures, released after Chancellor Rachel Reeves' first Budget, reflect her strategy to balance increased spending with higher taxes and borrowing. This economic situation parallels the pandemic year of 2020 in terms of the gap between state income and expenditure. The developments raise concerns about the sustainability of the fiscal policy approach adopted by the Labour government.