Government borrowing highest for three years in October

Government borrowing hit a three-year high in October after a steep rise in spending and a slowdown in tax receipt growth, according to official figures.

The Office for National Statistics (ONS) said public sector net borrowing, excluding state-owned banks, rose by £1.6 billion last month to £8.8 billion.

This was the highest October borrowing since 2015 and was far more than the £6.2 billion economists had expected.

Government borrowing
Government borrowing

But despite the October surge, year-to-date borrowing was still sharply lower at £26.7 billion – down by £11.2 billion year-on-year and the lowest for 13 years.

Samuel Tombs, chief UK economist at Pantheon Macroeconomics, said: “Hefty public borrowing in October has brought the run of good news on the public finances to an abrupt end, though it’s too soon to conclude that the Chancellor [Philip Hammond] is set to miss the forecasts laid out in last month’s Budget.”

He said borrowing for the full year ending March will total £28.2 billion, above the Office for Budget Responsibility’s new forecast of £25.5 billion if the year-to-date trend persists.

Even so, Mr Tombs said that borrowing would still equal just 1.3% of gross domestic product (GDP), the lowest since 2001/02 and that the “modest fiscal stimulus planned for next year still could go ahead, given that the Chancellor incorporated £15 billion of ‘fiscal headroom’ into the Budget plans”.