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The British government strongly borrowing an exceeding of expectations in February, according to official figures, highlighting the pressure on Chancellor Rachel Reeves while she is preparing for her spring declaration next week.
The deficit between government income and expenses was 10.7 billion pounds Sterling last month, the Office for National Statistics said. This compared to a forecast of 6.5 billion sterling pounds from the Office for Budget Responsibility, the government’s tax guard dog and a similar projection in a Reuters survey of economists.
Reeves is preparing for a Spring This will introduce new pressure on public spending while trying to keep public finances on the right track. The Chancellor has committed, under her tax rules, to balance the current budget, which excludes investment, by 2029-30.
But the weak state of the economy and public finances OBS means forecast should indicate that new expenses are required. The government has announced well-being savings plans of 5 billion pounds sterling per year and is expected to unveil new pressure on ministerial expenses on Wednesday.
“Cost reduction can only go so far, and except a surprise increase in the UK’s growth this summer, we believe that new tax increases seem inevitable in the fall,” said James Smith, economist at ING. “The public finances of Great Britain work under increasingly fine margins.”
The exceeding of February in the loan has been motivated both by darker than expected receipts and higher expenses, leaving the government on the right track for a “heavy” surpassing in its current budget deficit during the current financial year, Alex Kerr told Capital Economics.
The figures, he added, underline “how difficult the choices are [Reeves] Faces in the coming years will be ”.
During the financial year at February, the deficit was 132.2 billion pounds sterling, or about 14 billion pounds more than at the same time of the previous year. It was well above the forecast of 111.8 billion pounds sterling by the OBR in October 2024.
Excess, said that Mark Dowding, investment director for fixed income securities at RBC BlueBay Asset Management, was not surprising since “growth is lower than OBR forecasts and borrowing costs”.
The OBR in October has planned GDP growth of 2% for this year, but low shootings mean that it will be greatly reduced next week. The Bank of England in February planned growth of only 0.75% in 2025.
The British government’s obligations weakened in the morning trade on Friday, underperforming other major markets and pushing the yield to 10 years from 0.03 percentage points to 4.68%.
Pooja Kumra, a securities TD rate strategist, said the figures suggested that there were up to 20 billion pounds of additional funding for the central government over current official expectations, which could mean more debt sales during the year 2025-26.
The increase in golden yields on Friday suggests that investors “fear that, ultimately, all these shortcomings will be covered by more emission,” she added.
The Ratio de la debt from the Net Government to GDP at the end of February was temporarily estimated at 95.5%, according to the press release from the ONS, 0.1 more percentage points than a year ago.
Reeves left his first budget in October with Habeal Sorge against his current deficit rule of 9.9 billion pounds sterling, but this was wiped by the increase in government loan costs and flat growth.
Golden investors have warned that the chancellor will have to rebuild this margin To show that she keeps public finances of Great Britain in order.
Reeves insisted that the announcement of next week will not constitute a major budgetary event, the officials saying that there will be No tax increase.
But pressures, including the need to increase defense expenses and repair public services, suggest that it could be forced to new revenue reduction measures for this parliament, predict economists.
Darren Jones, chief secretary of the Treasury, said: “We will refocus the public sector on our missions and, for the first time in 17 years, passing through each penny from online taxpayers to ensure that he helps us to secure the future of Great Britain thanks to the change of change.
“At the heart of this urgent mission is good public finances, based on our non -negotiable tax rules.”
