“Spending pressures could weaken the UK’s fiscal outlook ahead of the Budget” says Dennis Tatarkov, Senior Economist at KPMG UK.
“Higher-than-expected government spending points to mounting cost pressures in funding the UK’s public services, which could worsen the fiscal outlook when the OBR updates its forecasts at the next Budget. Since April this year, the UK central government borrowed an extra £99.4bn, slightly ahead of the OBR’s forecast and more than during the same period in 2024/25.
Total borrowing is now around £7bn ahead of the OBR’s forecast in March this year. On current trends, borrowing for the 2025/26 fiscal year could reach £123.2bn. Furthermore, our longer-term forecasts point to a £27bn gap against the Government’s fiscal targets, which may need to be covered by a mix of spending cuts and tax increases.”
