The British government borrowed more than expected in the last fiscal year, official data revealed on Wednesday, underscoring the pressures the Labour government faces on the economic front as it also contends with U.S. tariffs.
Public sector net borrowing – the difference between spending and tax receipts – stood at 151.9 billion pounds ($202.4 billion) in the year to the end of March, the Office for National Statistics (ONS) said in a statement.
That marks the third-highest financial-year borrowing on record, behind 2020/2021 during the COVID-19 pandemic and 2009/2010 during the fallout from the global financial crisis, the ONS said.
The figure far exceeded the 137.3 billion pound forecast by the Office for Budget Responsibility (OBR), Britain's spending watchdog.
The Labour government, led by Prime Minister Keir Starmer, was elected last July on a promise to revive sluggish growth but has since struggled due to fresh economic headwinds and stubborn inflation.
Treasury chief Rachel Reeves has already implemented business tax hikes and announced billions of pounds of public spending cuts, including those to disability welfare payments, in an effort to shore up public finances.
But since then, U.S. President Donald Trump's 10% tariffs on the U.K., as well as on other countries, threaten to strain the country's economic outlook further.
The International Monetary Fund (IMF) on Tuesday downgraded its 2025 growth forecast for the U.K. to 1.1%, from a previous estimate of 1.6%, largely attributed to domestic factors – such as weak growth in the second half of last year – in addition to the impact of tariffs.
Weaker economic growth would result in lower tax receipts, further piling pressure on public finances.
"March's public finances figures showed that public borrowing was overshooting the OBR's forecast even before the influence from the tariff chaos is felt," said Ruth Gregory, deputy chief U.K. economist at Capital Economics.
"This raises the chances that if the chancellor (of the exchequer, Reeves) wishes to stick to her fiscal rules, more tax hikes in the Autumn Budget will be required," she added.
