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Government borrowing came in higher than expected in April, official figures showed, despite an increase in employer national insurance contributions coming into effect last month.
Borrowing — the difference between spending and income from taxes — came in at £20.2bn in April, which was up £1bn from the same month last year, according to the Office for National Statistics (ONS).
This was also higher than the consensus forecast of £17.9bn, according to Capital Economics.
"April’s public finances figures showed that despite the boost from the rise in employers’ national insurance contributions (NICs), the fiscal year got off to a poor start," said Ruth Gregory, deputy chief UK economist for Capital Economics.
"This raises the chances that if the chancellor wishes to stick to her fiscal rules, more tax hikes in the autumn budget will be required."
Chancellor Rachel Reeves announced that an increase in employer NICs in her first autumn budget in October, which kicked in last month.
The ONS said that borrowing for the financial year ended in March was estimated at £148.3bn, £3.7bn lower than its initial estimate published last month. That figure was £11bn more than the £137.3bn predicted by the UK's official forecaster, the Office for Budget Responsibility (OBR).
Rob Doody, deputy director for public sector finances at the ONS, said: "At £1bn higher than the same time last year, this April's borrowing was the fourth highest for the start of the financial year since monthly records began more than 30 years ago.
"Receipts were up on last April, thanks partly to the highest rate of national insurance contributions. However, this was outweighed by greater spending due to rising public services' running costs and increases in many benefits and state pensions."
The ONS said the UK's current budget deficit — which refers to borrowing to fund day-to-day public sector activities — in the financial year ended in March was estimated to be £70.3bn. This figure was £4.3bn lower than its initial estimate released last month and £9.6bn more than the £60.7bn forecast by the OBR.