Skip to content
CityAM
Main navigation
  • News
    • News
      • Latest Business News
      • Economics
      • Politics
      • Tech
      • Banking
      • FTSE 100 Live
      • Retail
      • Insurance
      • Legal
      • Property
      • Transport
      • Markets
    • From our partners
      • AON
      • Bayes Business School
      • Canada BIDs
      • Central London Alliance CIC
      • Destination City
      • Halkin
      • Olympia
      • Inside Saudi
      • Tottenham Hotspur Stadium
      • Santander X
      • YEAR SIX Dividend
    • Featured

      FTSE 100 Live: Stocks to extend losses as investors weigh up US-Iran deal

      Breaking news concept with a dynamic world map, digital data streams, and futuristic technology elements

      Submit a story

      Tell us your story.

      Submit
  • Opinion
  • Sport
    • Latest Sports News
      • Sport
      • Sport Business
    • From our partners
      • The Morning Briefing: SBS x CityAM
      • Aramco Team Series
      • LIV Golf
    • Featured

      2026 World Cup: How England went from misery to magnet for blue chip brands

      Business professionals discussing strategy in a modern office with charts and graphs on a digital display in the background

      Submit a story

      Tell us your story.

      Submit
  • Life&Style
    • Life&Style
      • Life&Style
      • Toast the City Awards
      • The Magazine
      • Travel
      • Culture
      • Motoring
      • Wellness
      • The RED BULLETiN
      • Do it with Shared Ownership
      • Media Speak Hub
    • Featured

      Old Pulteney releases 50-year-old whisky for 200th anniversary

      Old Pulteney 50-Year-Old single malt Scotch whisky bottle with elegant packaging on display, highlighting luxury and craft...

      Submit a story

      Tell us your story.

      Submit
  • Investec
  • Events
  • Latest Paper
Wednesday 22 January 2025 7:19 am  |  Updated:  Wednesday 22 January 2025 8:42 am

UK economy: Borrowing overshoots expectations as interest bill spikes

By: Chris Dorrell

Add as a preferred source on Google
The new National Wealth Fund (NWF) will take an equity stake in Connect Kerb alongside Aviva Investors, the global asset management branch of Aviva Group.
The new National Wealth Fund (NWF) will take an equity stake in Connect Kerb alongside Aviva Investors, the global asset management branch of Aviva Group.

Government borrowing overshot expectations last month, new figures show, as ministers promised to take a hard line to tackle government “waste”.

According to figures from the Office for National Statistics (ONS), the government borrowed £17.8bn in December, well ahead of the £14.6bn expected by the Office for Budget Responsibility (OBR).

This was the third highest December figure on record, behind 2009 and 2020, and the highest in four years, the figures showed.

“Compared with December 2023, spending on public services, benefits, debt interest and capital transfers were all up, while an increase in tax receipts was partially offset by a reduction in National Insurance contributions, following the rate cuts earlier in 2024,” ONS Deputy Director for Public Sector Finances Jessica Barnaby said.

The interest payable on central government debt was £8.3bn in December, nearly £4bn higher than last year and the third highest December figures since January 1997. This figure does not include the effect of January’s spike in gilt yields.

In the first nine months of the financial year, government borrowing has totalled £129.9bn, exceeding the OBR’s forecasts for the same period by £4.1bn.

This put borrowing in the year-to-date as at its second highest level since records began in 1993.

Source: ONS

Public sector net financial liabilities (PSNFL) was estimated at 84.5 per cent of GDP, which was 1.9 percentage points higher a year earlier, while public sector net debt stood at 97.2 per cent of GDP.

Alex Kerr, UK economist at Capital Economics, said the figures were “disappointing” and “underline the challenges that face the Chancellor”.

Read more

Rachel Reeves oversees borrowing spike as benefits spending offsets tax haul

Breaking news event with attendees discussing the latest developments and impacts in the general news sector

The government’s fiscal position attracted renewed scrutiny at the turn of the year following jitters in the gilt market.

A surge in borrowing costs in early January looked like it could wipe out the Chancellor’s headroom against her key fiscal rule, which requires tax receipts to meet day-to-day spending.

Yields have recovered almost all of the ground lost earlier in January, but Reeves is still in a precarious fiscal position.

Capital Economics estimates that the Chancellor’s headroom has been reduced from £10bn to just £2bn, as gilt yields are still higher than they were at the time of the Budget.

Following this morning’s figures, Darren Jones, chief secretary to the Treasury, said that the fiscal rules were “non-negotiable” and promised to cut back on unnecessary government spending.

“Through our Spending Review we will interrogate every line of government spending for the first time in 17 years. We’ll root out waste to ensure every penny of taxpayer’s money is spent productively and helps deliver our Plan for Change,” he said.

The spending review, which will determine the details of departmental budgets for the rest of the decade, will conclude in June.

Departments will not receive any funding for new projects unless they meet the Treasury’s demand to reduce spending by five per cent, Jones said in a speech yesterday.

Read more

Pension fund snaps up cut-price government bonds amid Starmer sell-off

Standard Life office building exterior, representing one of the UKs largest pension funds, in a business context

Share this article

  • Facebook
  • X
  • LinkedIn
  • WhatsApp
  • Email

Similarly tagged content:

Sections

  • News

Categories

  • Economics

People & Organisations

  • Budget
  • debt
  • Government borrowing
  • Rachel Reeves
  • UK economy

Trending Articles

  • As it happened: FTSE 100 relief rally runs out of steam as BP and Shell weigh; Oil hits three-month low

  • London Tech Week sums up everything wrong with UK tech

  • Rolls-Royce shares surge as SMR unit bags multi-billion pound Swedish nuclear contract

  • KPMG’s Summer Friday half-day rollback signals deeper woes for Big Four giants

  • Inflation expectations at record high in interest rates signal

More from CityAM

  • Rachel Reeves oversees borrowing spike as benefits spending offsets tax haul

    Economics
    Breaking news event with attendees discussing the latest developments and impacts in the general news sector
  • Pension fund snaps up cut-price government bonds amid Starmer sell-off

    Markets
    Standard Life office building exterior, representing one of the UKs largest pension funds, in a business context
  • Kemi Badenoch warns of ‘Burnham premium’ on mortgages

    Politics
    Badenoch discusses economic policy at a press conference, addressing key financial strategies to boost national growth.
  • Reeves warned Iran war oil shock will lead to government borrowing spike

    Economics
    Rachel Reeves speaking at an IOD event.
  • UK borrowing costs waver as Starmer insists he will not ‘walk away’

    Politics
    Keir Starmer addressing media, taking responsibility, with serious expression, in a press conference setting.
  • Burnham rows back on £10bn Waspi women offer

    Politics
    Andy Burnham discusses support for Waspi women, addressing pension injustice in a public speech.
  • OECD: Growth to remain below one per cent as UK economy struggles with unemployment

    Economics
    Sir Keir Starmer and Rachel Reeves discussing policy at a press conference, emphasizing Labours economic strategy
  • Inflation expectations at record high in interest rates signal

    Economics
    Bank of England building on Threadneedle Street, London, showcasing its historic architecture and financial significance
  • Terms & Conditions
  • Privacy Policy
  • Cookie Policy
  • News
  • Markets & Economics
  • Politics
  • Opinion
  • Life&Style
  • Personal Finance

Follow us for breaking news and latest updates

  • Facebook
  • X
  • Instagram
  • LinkedIn
Copyright 2026 CityAM Limited