UK borrowing rises in October but leaves Hunt room for some tax cuts – business live

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Britain borrowed almost £15bn to balance the public finances last month, more than expected, new figures show.

However, borrowing so far this financial year is nearly £17bn lower than forecast – giving room for some policy changes in tomorrow’s autumn statement.

Public sector net borrowing excluding public sector banks rose to £14.9bn in October, the Office for National Statistics reports. That’s £4.4bn more than in October 2022, and also more than September’s £14.6bn.

Economists had expected a smaller deficit last month, of around £12bn.

It’s the second highest October borrowing since monthly records began in 1993, after October 2020 (when Covid-19 pandemic spending pushed the deficit up to almost £20bn).

Public sector net borrowing, excluding public sector banks, in October 2023 was £14.9 billion.

£4.4 billion more than in October 2022 and the second highest October borrowing since monthly records began in 1993.

pic.twitter.com/9e5524XQ9g

— Office for National Statistics (ONS) November 21, 2023 This takes borrowing this financial year (since April) up to £98.3bn, which is nearly £22bn more than a year ago.

But, despite some upward revisions to borrowing over recent months, it is still £16.9bn less than the Office for Budget Responsibility (OBR) forecast in March 2023.

That confirms that chancellor Jeremy Hunt does have some more ‘headroom’ to raise spending or cut taxes while sticking to the UK’s fiscal rules, when he delivers the autumn statement at 12.30pm on Wednesday.

A chart showing UK borrowing in the financial year to October 2023

Photograph: Office for National Statistics has responded to the news, saying:

“We met our pledge to halve inflation, but we must keep on supporting the Bank of England to drive inflation down to 2%. That means being responsible with the nation’s finances.

“At my Autumn Statement tomorrow, I will focus on how we boost business investment and get people back into work to deliver the growth our country needs.”

Yesterday, prime minister hinted that business taxes could be cut to boost economic growth.

Sunak promised to reduce the tax burden “carefully and sustainably” and “over time”, stressing that he is focused on “the supply side” of the economy.

Also coming up today The Treasury Committee will question the Bank of England governor, Andrew Bailey, and members of the Monetary Policy Committee (MPC) today, about inflation and economic data.

The committee are likely to quiz witnesses about the latest wage growth and unemployment, and if there’s a risk the Bank has overtightened monetary policy....

Last night, Bailey said there was more work to do to bring inflation back to its 2% target – and there remained a risk that borrowing costs might need to increase in the coming months.

The governor declared:

“Let me be very clear: it is far too early to be thinking about rate cuts.”

The agenda