Lower tax receipts leave borrowing higher than forecast – and no signs of extra wriggle room to fuel another pre-election Budget

UK borrowing over the last fiscal year (2023-24) was £7.6 billion lower than last year, but £60 billion higher than the year before the pandemic and, critically, £6.6 billion higher than the Office for Budget Responsibility’s forecast at the Spring Budget last month, the Resolution Foundation said today (Tuesday).

The higher than forecast borrowing was driven by lower than expected tax receipts, down over £7 billion on the OBR’s latest forecast, though they were still over £65 billion up on the year before as a result of high inflation and rising taxes. High inflation and rising interest rates also contributed to public spending rising by £58 billion on the year.

Overall, the full fiscal year figures show that Britain has a moderate current deficit of 3.0 per cent, but the highest debt levels since the 1960s at 89.4 per cent (excluding Bank of England debt). These public finances, when combined with higher interest rates, highlights the huge fiscal pressure the government faces in the 2020s.

Cara Pacitti, Senior Economist at the Resolution Foundation, said:

“Last year was one of high but falling inflation and rising interest rates, causing both spending and tax receipts to rise in nominal terms compared to the year before.

“While lower than last year, borrowing is already £6.6 billion higher than forecast at the Spring Budget last month. So far there are no signs of any new fiscal wriggle room emerging that might allow the Chancellor to announce another pre-election Budget in the Autumn.”