FIVE KEY ECONOMIC INDICATORS LIKELY TO SHAPE BUDGET

Government borrowing for the current financial year is running at a higher level than forecast and is the highest on record outside the Covid-19 pandemic.

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Borrowing stood at £116.8 billion for the seven months from April to October 2025, according to figures published last week by the Office for National Statistics (ONS).

This is £9.9 billion more than the £106.9 billion forecast for this period by the Office for Budget Responsibility (OBR) in March.

It is also the second-highest borrowing figure for April-October since comparable data began in 1993, behind only 2020.

The Government has overshot forecasts this year due to “a combination of lower-than-expected tax receipts and higher-than-expected borrowing by councils and other bodies outside of central government control”, according to the Institute for Fiscal Studies think tank. It means that when the OBR publishes its new economic forecasts alongside the Budget on Wednesday, total borrowing for the current financial year is likely to be revised up, as it may be for subsequent years.

It is not unusual for a government to borrow in order to spend more than it receives in taxes and other income.

The last time the government spent less than it received was 25 years ago, in 2000/01.

However, borrowing is now running at a comparatively high level and the latest figures are a reminder of how economic forecasts can be subject to a lot of uncertainty.

Should borrowing continue to be higher than expected, Rachel Reeves may need to find additional ways to ensure she has enough “headroom” in her Budget to balance the nation’s finances.

ECONOMIC GROWTH