UK Government Borrowing Soars to Five-Year High, Tax Rises Expected in Autumn Budget

Government borrowing in August reached £18 billion, the highest level in five years and significantly surpassing forecasts, which has intensified pressure on Chancellor Rachel Reeves ahead of the November Budget. The increase in borrowing was driven primarily by soaring interest payments on government debt, rising benefits, and public service expenditures, which offset gains from the National Insurance Contributions hike. Experts, including Martin Beck from WPI Strategy and Elliott Jordan-Doak from Pantheon Macroeconomics, warn that the £10 billion fiscal buffer has likely been lost, making tax rises inevitable to close a growing fiscal deficit that could exceed £20 billion. Proposals under consideration include raising capital gains tax and introducing a gambling levy, alongside stealth and sin tax increases and some spending cuts. The government maintains it has plans to reduce borrowing and emphasizes fiscal responsibility, economic stability, and reforms aimed at prioritizing taxpayer money on national needs rather than debt interest. These developments suggest that Chancellor Reeves faces a challenging path to meet her fiscal rules of reducing government debt and balancing the budget by 2030.