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UK government borrowing overshot expectations in March and in the full fiscal year, in a setback for chancellor Rachel Reeves as the economy faces the impact of Donald Trump’s tariffs.
The shortfall between government income and spending was £16.4bn last month and £151.9bn in the 12 months to March, the Office for National Statistics said on Wednesday.
This compares with a £16bn shortfall expected by economists for March and a forecast for the full financial year of £137.3bn from the Office for Budget Responsibility, the government’s fiscal watchdog.
The OBR warned last month that, despite recent welfare cuts, the government’s “fiscal headroom” — or budgetary room for manoeuvre — remains historically small at £9.9bn.
The UK’s economic outlook has since deteriorated, which could put further pressure on tax revenues and public finances.
Like many other countries, Britain has been hit by Trump’s tariffs, which include 10 per cent across-the-board duties and higher levels on steel and cars.
On Tuesday, the IMF cut its 2025 growth forecast for the UK to 1.1 per cent, down from its previous estimate of 1.6 per cent, warning of widespread economic disruption from trade tensions. It cut its global growth forecast by 0.5 percentage points to 2.8 per cent.
This is a developing story
