STORY
The Government borrowed more than expected in May, increasing pressure on Chancellor Rachel Reeves as she seeks to keep within her fiscal rules. Public sector net borrowing reached £23.3 billion during the month, according to figures reported by Reuters, around 30 per cent higher than in May last year.
The increase was driven in part by higher debt interest costs, with inflation affecting the cost of servicing index-linked gilts. Borrowing over the first two months of the financial year was also reported to be ahead of the Office for Budget Responsibility’s forecast, adding to the challenge facing the Treasury before the next Budget.
Reeves has said reducing borrowing costs remains an important priority for the Government. The figures come as Labour faces wider political pressure over public spending, tax policy and the fiscal implications of possible changes in leadership.