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UK borrowing reached £17.8bn in December, which was the highest figure for the month in four years, putting further pressure on Chancellor Rachel Reeves.
Official data released by the Office for National Statistics (ONS) on Wednesday showed that public sector net borrowing — the difference between government spending and income — was £10.1bn higher than the same month in 2023.
This figure was also higher than the £14.1bn forecast by economists polled by Reuters, and the Office for Budget Responsibility's (OBR) estimate of £14.6bn.
Jessica Barnaby, ONS deputy director for public sector finances, said: "At almost £18bn, borrowing last month was the third highest in any December record.
"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."
This meant that total borrowing costs for the year stood at £129.9bn, compared with £8.9bn in 2023. It also marked the second-highest financial year-to-December borrowing since records began in January 1993.
The ONS data showed that the current budget deficit – borrowing to fund day-to-day public sector activities – was £10.0bn in December, which was £7.3bn more than in the same month in 2023.
Net debt, excluding public sector banks, was estimated at 97.2% of gross domestic product (GDP) in December, inching 0.3% higher than at the end of 2023. This was also the highest level since the early 1960s.
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The interest payable on central government debt was £8.3 billion in December 2024, which was £3.8bn more than in December 1997.
A recent sell-off in UK government bonds – known as gilts – drove yields higher, which meant the cost of borrowing jumped. This sparked fears that that this will put pressure on Reeves to further raise taxes and cut spending.
Alex Kerr, UK economist at Capital Economics, said that while "market interest rate expectations and gilt yields have fallen in the last week, they are still higher than at the time of the budget and suggest that the chancellor’s headroom against her fiscal rules has been whittled down from £9.9bn in October to £2bn."