THE Chancellor has been dealt another setback after borrowing hit the highest level in five years, making Budget tax rises “inevitable”.
The Government borrowed more money than expected last month, at £18billion, according to the latest figures from the Office for National Statistics (ONS).
This was £3.5billion more than in August 2024.
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The interest on Government debt soared by £1.9billion to £8.4billion, which added to higher spending on benefits and public services.
This offset any boost from the National Insurance Contributions hike, the ONS said.
It marked the highest August borrowing since 2020, significantly overshooting the £12.8billion expected by economists.
The level of government borrowing was £5.5billion higher than the Office for Budget Responsibility forecast in March.
Meanwhile, borrowing for the first five months of the financial year hit £83.8billion.
This was £16.2billion higher than the same period last year and well ahead of the OBR’s £72.4billion prediction.
Martin Beck, chief economist at WPI Strategy, said: “The £10billion buffer the Chancellor pencilled in against her key fiscal rule in March has almost certainly gone.
“That means tax rises in November look inevitable.”
James Murray, Chief Secretary to the Treasury, insisted the Government “has a plan to bring down borrowing because taxpayer money should be spent on the country’s priorities, not on debt interest”.
He added: “Our focus is on economic stability, fiscal responsibility, ripping up needless red tape, tearing out waste from our public services, driving forward reforms and putting more money in working people’s pockets.”
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