UK annual borrowing jumps but undercuts forecast

UK state borrowing jumped last year on vast energy market subsidies but undershot forecasts, data showed Monday, which analysts said was stoking hope of pre-election giveaways.

The government’s public sector net borrowing expanded to £139.2 billion ($174.0 billion) in its year to the end of March, the Office for National Statistics said.

That was the fourth highest annual amount since records began and compared with £121.1 billion in the previous fiscal year, when the public purse was already under immense strain from Covid pandemic expenditure.

Yet annual borrowing significantly undershot an official state forecast of £152.4 billion given alongside the budget last month.

Nevertheless, borrowing in March alone ballooned to £21.5 billion -- the second-highest total on record for the month -- due to energy support measures.

Prime Minister Rishi Sunak’s Conservative government last year launched energy subsidies to ease a cost-of-living crisis and rampant inflation, sparked by soaring electricity and gas bills after Russia’s invasion of Ukraine.

“These numbers reflect the inevitable consequences of borrowing eye-watering sums to help families and businesses through a pandemic and (Russian President Vladimir) Putin’s energy crisis,” said finance minister Jeremy Hunt, whose offi-cial title is chancellor of the exchequer.

“We stepped up to support the British economy in the face of two global shocks, but we cannot borrow forever.”

Sunak’s Conservatives and the main opposition Labour party are meanwhile jockeying for position ahead of an election widely expected next year.

Better-than-expected annual borrowing could potentially hand the government more room for giveaways to woo voters.

“The news that total borrowing was lower than... predicted only a month ago provides the Chancellor with more wiggle room to cut taxes/raise spending ahead of the next general election,” said economist Ruth Gregory at research consultan-cy Capital Economics.