UK government borrowing increased by more than expected in February, highlighting the existing pressure on public finances even before the conflict in the Middle East pushed energy prices higher.
Public sector borrowing rose to £14.3bn in February, according to data released by the Office for National Statistics (ONS) on Friday. This was £2.5bn higher than the same month a year ago and was ahead of consensus forecasts of £8.5bn.
The data covers the period before the start of the conflict between the US, Israel and Iran on 28 February, which has driven a surge in oil and gas prices, leading to fears of prolonged energy price shock and a resurgence in inflationary pressures.
This came after the government recorded its largest budget surplus in January of £30.4bn, which was almost double the £15.9bn reported for same month a year ago.
Borrowing for the financial year to January was £125.9bn, which was £11.9bn less than the same 11-month period a year ago.
Tom Davies, senior statistician at the ONS, said: “While receipts were up on last year, that was outweighed by a rise in spending, including the later timing of some debt interest payments.”
The current budget deficit – borrowing to fund day-to-day public sector activities – came in at £5.1bn for the month. The total current budget deficit for the financial year to February was £62.1bn, which was £16.7bn less than the same period last year.
Public sector net debt excluding banks was provisionally estimated to be 93.1% of the UK’s gross domestic product (GDP) at the end of February.
Central government receipts came in at £95.1bn last month, which was £8.1bn more than the same month last year.
Ruth Gregory, deputy chief UK economist, said: February’s public finances figures showed that the fiscal position was worse than expected even before the full impact of the surge in energy prices is felt.
“As a result, we doubt there is scope for a large-scale fiscal support package like that seen in 2022, even in more extreme scenarios in which the conflict in the Middle East escalates further.”
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