UK Borrowing Drops to £132 Billion in 2024-25

UK government borrowing dropped sharply to 132 billion pounds in the financial year ending March 2025, marking a 19.8 billion pound decline from the previous year and providing some relief to Chancellor Rachel Reeves amid global economic turbulence.

The Office for National Statistics reported the figure on Thursday, noting it fell 13.1 percent year-on-year and came in 700 million pounds below the Office for Budget Responsibility's forecast of 132.7 billion pounds. This represented the lowest annual borrowing total since the 2022-23 financial year. As a share of gross domestic product, borrowing stood at 4.3 percent, the smallest proportion since 2019-20, before the coronavirus pandemic.

The improvement stemmed from robust tax revenues that outpaced rises in public spending. Receipts increased by 9.1 percent, or 87.7 billion pounds, over the year, driven by last April's hike in employer national insurance contributions, which boosted collections to 206.8 billion pounds, the highest since 2022-23. Inheritance tax and capital gains tax also reached record levels, surpassing expectations. Although government expenditure grew, higher income from these sources more than compensated,...