KaiTuo Macro: UK fiscal pressure intensifies, net borrowing in September exceeds government expectations

On October 22nd, Jin10 Data reported that Alex Kerr, a macroeconomist at Capital Economics, stated that the UK’s net borrowing in the public sector was 16.6 billion pounds in September, higher than the Office for Budget Responsibility’s (OBR) estimated 15.1 billion pounds. This was mainly due to public sector wage pump and inflation. The data shows that if Britain’s Chancellor of the Exchequer, Rishi Sunak, does not raise taxes in next week’s budget, there will be almost no room for increased spending. Kerr said that the current government borrowing will be £6.6 billion higher than the OBR’s forecast for 2024-25. This will limit the choices Sunak has in the budget. However, changing the debt measurement standards used in fiscal rules will provide him with more room for maneuver.