Government borrowing jumps in August to 100% of GDP, highest level since 1960s

Public sector borrowing hit its third highest August on record as the amount of cash the Government had to borrow to balance its books surged, official figures show

Chancellor Rachel Reeves faces a fresh headache ahead of her first Budget this autumn after official figures revealed Government borrowing jumped by more than expected last month.

The amount borrowed skyrocketed to £13.7bin the previous month, becoming the third highest August deficit ever recorded a spike propelled by steeper public service outlays due to surging running costs and salary hikes. This uptick in borrowing has nudged public sector debt to 100% of GDP at the close of August 2024.

This debt size, stripping out the figures from public sector banks, catapults national debt back to levels not witnessed since the beginning of the 1960s, noted the Office for National Statistics (ONS). ONS chief conomist Grant Fitzner said: "Borrowing was up by over £3billion last month on 2023's figure, and was the third highest August borrowing on record."

Income from central Government taxes saw a leap, but it was overshadowed by ballooning expenses, impacted by benefits upgrades and higher spending on public services due to increased costs and wages, he explained. Compared to August last year, public sector borrowing had climbed by £3.3billion, confirmed the ONS.

The total sum borrowed in August overshot the Office for Budget Responsibility (OBR), Britain's official forecaster, which had predicted a lesser figure of £11.2billion, and was also over the £13billion mark that most economists had predicted.

Treasury' Chief Secretary, Darren Jones, said: "When we came into office, we inherited an economy that wasn't working for working people. Today's data shows the highest August borrowing on record, outside the pandemic. Debt is 100% of GDP, the highest level since the 1960s."

"Because of the £22billion black hole in our public finances we have inherited this year alone, we are taking the tough decisions now to fix the foundations of our economy, so we can rebuild Britain and make every part of the country better off."

It comes after the new Chancellor accused the previous Conservative government of leaving a £22billion black hole in the public finances. The Government's recent move to limit winter fuel payments exclusively to those receiving pension credit falls into the category of "tough decisions" Ms Reeves indicated she would be forced to make in October in an attempt to address the financial shortfall.

Borrowing in the financial year up to August 2024 reached £64.1billion, which is £0.3billion more than the same period last year.