The UK Government borrowed more money than expected in the financial year ending in March 2025. According to new data from the Office for National Statistics (ONS), public sector borrowing reached £151.9 billion.
This is £14.6 billion more than the £137.3 billion forecast made by the Office for Budget Responsibility (OBR). It is also £20.7 billion more than what was borrowed during the previous financial year.
The amount is now the third-highest yearly borrowing total since records began in 1947.
What Is Public Sector Borrowing?
Public sector borrowing happens when the Government spends more than it collects in income, such as taxes. It covers the cost of running public services and paying benefits.
In March 2025 alone, the Government borrowed £16.4 billion. That makes it the third-highest March borrowing on record.
Why Borrowing Went Up
Spending rose faster than income. Although the Government received more money through taxes, inflation pushed up costs. Wages in the public sector and benefits also increased.
High energy prices and bills added to the problem. The cost of living is still high, which puts pressure on public services.
Debt Levels Remain High
At the end of March 2025, public debt was nearly equal to the UK’s total yearly economic output. This level of debt was last seen in the early 1960s.
The Government is also paying more in interest because inflation has raised borrowing costs.
Global Issues Add Pressure
New tariffs on US imports, introduced by former US President Donald Trump, have made global trade more difficult. These changes are expected to slow economic growth worldwide.
The International Monetary Fund (IMF) recently reduced its forecast for UK growth by 0.5 percentage points. The US forecast was cut by 0.9 percentage points.
The UK downgrade was caused by higher inflation, lower consumer spending, and concerns about trade.
Government Response
UK Chancellor Rachel Reeves said the world is going through big changes in trade. She said the Government will stay focused and protect the economy.
Chief Secretary to the Treasury Darren Jones said the Government will continue to spend money carefully and follow its long-term plans. These include putting more money in people’s pockets, fixing the NHS, and strengthening the UK’s borders.
Opposition Reactions
The Conservative Party criticized the Government’s financial choices. Shadow Chancellor Mel Stride said the new borrowing figures show the cost of policy changes. He said changing the fiscal rules and increasing borrowing will lead to more debt.
What This Means for the UK
Rising borrowing and high debt levels show that the UK economy is under pressure. Inflation, energy prices, and global trade issues are making the situation harder to manage.
The Government must now decide whether to raise taxes, cut spending, or find other ways to manage its budget.
