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The UK government borrowed more money than expected in December, underscoring the scale of the challenge facing chancellor Rachel Reeves as she tries to restore confidence in her fiscal plans and turn around a sluggish economy.
Borrowing – the difference between public sector spending and revenue – was £17.8bn last month, £10.1bn more than December 2023, and the third highest of any December on record, data from the Office for National Statistics showed on Wednesday.
In the first nine months of the financial year borrowing was £129.9bn, which was £8.9bn more than the same period in the previous financial year, and the second highest borrowing in April to December since monthly records began in January. 1993.
The figures intensify pressure on Reeves who has sought to reassure investors behind the UK borrowing costs this month rose to its highest level since the global financial crisis, threatening his ability to meet his self-imposed fiscal policy where daily spending is covered by tax receipts.
Alex Kerr, an economist at the Capital Economics consultancy, said: “Against the background of slow GDP growth and high interest rates, the December increase in borrowing is disappointing news for the chancellor.”
December's increase was led by higher interest payment costs on inflation-linked bonds and a single payment to buy back military housing.
It was more than the £14.1bn expected by economists polled by Reuters, and the £14.6bn forecast by the Office for Budget Responsibility, the UK fiscal watchdog, in its latest set of forecasts made in October.
Borrowing costs in the UK have eased since last week's figures showed a rise in prices suddenly dropped in Decemberand global bond sales have been reduced.
Reeves has promised to lay out plans to turn around the economy, which grew 0.1 percent in November after slowing slightly in September and October, with businesses blaming Reeves' tax hikes. Budget for October with cool confidence and beating the labor market.
The OBR, which must produce two forecasts every financial year, will provide an update on March 26 on whether Reeves is on track to meet its lending rules.
As the Budget gave Reeves just £9.9bn of wriggle room to meet his finance bill, Kerr said there was a growing risk that the chancellor would need to cut spending or raise taxes, and his head room had been paid to £2bn.

Following the release of the December loan figures, Darren Jones, chief secretary to the Treasury, said: “Economic stability is central to our primary mission of delivering growth, that's why our fiscal rules are non-negotiable and why we'll hold back. in public funds.”
Elliott Jordan-Doak, economist at consultancy Pantheon Macroeconomics, said the OBR's forecasts were always “subject to material risks”.
“We expect the government to announce spending cuts – back-loaded towards the end of the financial year – at the next budget in March. A further tax hike in the next Budget in October is a good bet,” he added.
Sterling settled 0.2 percent lower at $1.23 after the release of the figures. Gilts were mostly flat, with the 10-year gilt yield at 4.59 percent.
In a sign of the pressure on public finances from high inflation, the cost of interest was £8.3bn in December, £3.8bn higher than a year earlier and the third highest December figure since the month's records. A £1.7bn payment to buy back military accommodation was added to the December loan.
Monthly tax receipts increased by £4bn from December 2023 to £65.5bn.
Public sector debt, or debt accumulated over time, was 97.2 percent of GDP, which is still at levels last seen in the early 1960s.