Budget tax rises ‘inevitable’ after borrowing costs soar – experts

CHANCELLOR Rachel Reeves has been dealt a further setback after official figures showed the highest August borrowing for five years, with warnings mounting that tax rises at the autumn Budget now look "inevitable".

- HOLLY WILLIAMS

Latest figures from the Office for National Statistics (ONS) showed far higher-than-expected borrowing last month, at £18bn, which was £3.5bn more than in August 2024.

Soaring interest on UK Government debt - up £1.9bn to £8.4bn - added to higher spending on benefits and public services and offset any boost from the National Insurance Contributions (NICs) hike, according to the ONS.

It marked the highest August borrowing since 2020, significantly overshooting the £12.8bn expected by most economists and was £5.5bn higher than forecast by the UK's independent fiscal watchdog, the Office for Budget Responsibility (OBR), in March.

After a raft of upward revisions to the previous month's data, borrowing for the first five months of the financial year hit £83.8bn.

This was £16.2bn higher than the same period a year ago and well ahead of the OBR's £72.4bn prediction.