Government borrowing hits higher-than-forecast £17.4bn in October

UK Government borrowing has surpassed forecasts on the back of soaring debt interest and recent public sector pay rises.

Borrowing rose to £17.4 billion last month marking the second highest October figure since monthly records began, according to official figures.

The Office for National Statistics (ONS) said public sector net borrowing was £1.6 billion higher than the same month last year.

It came amid the first set of borrowing figures since the Government announced significant spending measures in last month’s autumn Budget.

Economists had predicted £13.3 billion of borrowing for October.

The fresh figures showed that central government debt interest rose to £9.1 billion for the month – the highest October figure on record.

This was £0.5 billion higher than the same month last year.

ONS deputy director for public sector finances, Jessica Barnaby, said: “This month’s borrowing was the second highest October figure since monthly records began in January 1993.

“Despite the cut in the main rates of national insurance earlier in 2024, total receipts rose on last year.

“However, with spending on public services, benefits and debt interest costs all up on last year, expenditure rose faster than revenue overall.”

The ONS said central government departmental spending on goods and services increased by £2.5 billion to £36.9 billion in October on the back of “pay rises and inflation increased running costs”.

This includes the impact of above-inflation pay deals which were announced after the Labour Government took office, with NHS staff and teachers witnessing backdated pay increases from last month.

Overall central government spending was £88.5 billion in October 2024, £3.9 billion more than the same month a year earlier.

Meanwhile, central government receipts – the amount of money it receives, predominantly through taxes – rose by £2.9 billion to £81.2 billion for the month.

The rise was supported by increases in corporation tax and income tax payments.

The ONS said public sector net borrowing as a whole stood at £96.6 billion for the financial year to October, as a result of the new figures.

It added that public debt, excluding state ownership in banks, was estimated at 97.5% of gross domestic product (GDP) at the end of October.

Chief Secretary to the Treasury Darren Jones said: “This Government will never play fast and loose with the public finances.

“Our new robust fiscal rules will deliver stability by getting debt down while prioritising investment to deliver growth.”