UK public sector borrowing hit £24.3bn in April - the highest for that month since the Covid pandemic in 2020 - proving that the only thing more stubborn than inflation is the government's appetite for red ink. That's up £4.9bn from a year ago and higher than analysts expected, because why start the fiscal year quietly?
Retail sales weren't feeling the party either, falling 1.3% in April - the steepest monthly drop in almost a year - as petrol prices spiked and motorists decided fuel was a luxury they could temporarily forgo. Motor fuel sales plummeted 10.2%, the biggest fall since November 2020, suggesting drivers either stocked up in March or have taken up walking.
Ruth Gregory, deputy chief UK economist at Capital Economics, summed it up with the cheerful observation that the figures "highlight the deteriorating growth outlook and fragile fiscal backdrop that will face whoever is in 10 Downing Street." So, good luck to that person.
Office for National Statistics (ONS) chief economist Grant Fitzner noted that April's borrowing was "substantially higher" than a year earlier, with higher tax receipts being "more than offset by higher spending on benefits and other costs." Net social benefits rose by £2.7bn, thanks to inflation-linked increases and the state pension's earnings-linked rise.
Debt interest payments hit a record April high of £10.3bn - up £0.9bn from last year - because nothing says "we're managing the economy well" like paying more just to service the debt.
The Iran war has sent energy prices soaring, prompting analysts to cut UK growth predictions. Households face higher fuel bills, and the Bank of England is no longer expected to cut interest rates - so everyone gets to enjoy higher borrowing costs and higher prices simultaneously.
Borrowing costs, measured by gilt yields, have risen since the conflict began, with financial markets betting the Bank might have to raise rates to rein in inflation. Political uncertainty surrounding the Labour party leadership hasn't helped either, because nothing calms markets like a leadership vacuum.
Rob Wood, chief UK economist at Pantheon Macroeconomics, estimated that "debt interest costs in 2026/27 will be about £15bn higher than assumed in the Budget if gilt yields hold at current levels." He added that "political risk" had added to the UK's borrowing costs, which he expects to remain "more elevated than they otherwise would be this year."
The government is trying to counter the cost-of-living crisis with measures like cutting VAT on family day-out tickets, free bus journeys for under-16s in England in August, and cuts to import taxes on some basic foods. To fund this, it's changing tax rules for UK-based oil and gas companies - because who doesn't love a bit of fiscal shell game?
Dennis Tatarkov, senior economist at KPMG UK, warned that lower growth forecasts mean "public sector borrowing is likely to remain elevated in the medium term, potentially forcing the chancellor's hand to make more tweaks to fiscal policy at the time of the autumn Budget."
In March's Spring Statement, the Office for Budget Responsibility (OBR) forecast that Chancellor Rachel Reeves had £23.6bn of headroom against her rule not to borrow for day-to-day spending in five years - but that was before the Iran war began. So that headroom might be more of a theoretical concept now.
Chief Secretary to the Treasury Lucy Rigby insisted the government was "cutting borrowing and debt - with our actions reducing government borrowing by over £20 billion last year." She added that "working families have benefited from falls in inflation and cuts to interest rates" and that "our non-negotiable fiscal rules will be all the more important" as the UK faces the consequences of a war it "played no part in."
Shadow chancellor Mel Stride highlighted that "debt interest spending was the highest of any April on record" and claimed "markets are increasingly worried about Keir Starmer's replacement." Liberal Democrat Treasury spokesperson Daisy Cooper called the figures "a clear sign of this government's failure to get Britain's economy growing again." Reform UK deputy leader Richard Tice said borrowing was "out of control" and blamed welfare and "wasteful overspending."
Meanwhile, retail sales fell 1.3% in April - the biggest monthly drop since May 2025 - led by a 10.2% plunge in motor fuel sales. The ONS suggested "motorists were conserving fuel after stocking up in March." Clothing stores also saw sales fall, partly due to "variable weather conditions," because apparently even the weather is in on the economic downturn.