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Government borrowing in UK rises significantly

UK borrowing hit £20.7 billion in June, raising concerns about possible tax hikes this autumn.

July 22, 2025 at 09:18 AM

Government borrowing increase adds to pressure on Reeves

Recent government borrowing increase raises concerns about tax hikes for upcoming budgets.

Government borrowing figures point to tax rise pressure on Chancellor Reeves

Government borrowing in the UK reached £20.7 billion in June, exceeding expectations. This marks a £6.6 billion increase from the same month last year and the second-highest June figure on record since 1993. A significant uptick in debt interest payments, which soared to £16.4 billion, largely due to inflation-linked costs, has fueled this rise. Analysts suggest that Chancellor Rachel Reeves will need to consider tax increases this autumn after reversing cuts to benefits aimed at reducing government expenditure.

Key Takeaways

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UK borrowing in June hit £20.7 billion, marking a concerning increase.

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Debt interest payments have almost doubled from last year, reaching £16.4 billion.

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Analysts predict tax increases are likely in the upcoming autumn budget.

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Chancellor Reeves' recent benefit cuts reversal adds pressure for further financial adjustments.

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The freeze on income tax thresholds may be extended, impacting taxpayer burden.

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Public sentiment may shift against potential tax hikes amid rising costs.

"The data piles more pressure on public finances."

Dennis Tatarkov underscores the urgent financial challenges facing the government through these borrowing figures.

"Things will probably get worse for the chancellor."

Alex Kerr warns that the economic outlook suggests additional pressures for tax raises.

The rising borrowing figures present a critical challenge for Chancellor Reeves, pushing the notion that tax increases may be inevitable in the coming fiscal year. As higher inflation affects debt payments, public sentiment may turn against more taxation. Public services spending continues to rise, and the reversal of prior benefit cuts places additional strain on finances. This scenario highlights the broader economic context where taxpayers face ongoing uncertainties about the government's financial strategy and fiscal responsibility.

Highlights

Rising borrowing raises fears of new tax burdens on taxpayers.
Chancellor Reeves faces tough choices with rising debt costs.
Increasing borrowing figures could mean inevitable tax hikes ahead.
Future budgets may hinge on public sentiment around new taxes.

Increasing government borrowing raises fiscal concerns

The significant rise in UK government borrowing, coupled with soaring debt interest payments, heightens the risk of public backlash over potential tax increases. Analysts express concerns that this will strain public finances and affect taxpayer sentiment.

As pressures mount, the Chancellor's next steps could decide the future fiscal landscape.

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uk borrowing taxes economics chancellor politics economy finance

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