Government spends big in the run-up to Christmas - but borrowing still in line with OBR forecasts

25th January 2025

Higher than expected spending meant that public sector borrowing in December was £3.2 billion above the Office for Budget Responsibility (OBR) forecast. But cash measures show government requirements remain on track in the run to recent new year market jitters, the Resolution Foundation said on Wednesday 22 January 2025 .

The latest ONS data shows that the Government borrowed £17.8 billion in December - £3.2 billion above the OBR forecast and financial-market expectations - and nearly £130 billion in the fiscal year to date (2024-25), £4.1 billion above than the OBR forecast.

Central government borrowed £2.5 billion more than expected this month but borrowing remains below forecast for the year to date. Crucially, tax receipts were slightly stronger than expected in December, and just £2 billion below the OBR forecast in the fiscal year to date.

Cash measures, which contain more information at this stage of the data cycle, are closer to the OBR's forecast – sitting just £800 million below the OBR's projections for the fiscal year to date.

The data comes ahead of a crucial period for the government finances, with tax returns in January offering a key indicator over whether the UK’s borrowing record remains on track.

Cara Pacitti, Senior Economist at the Resolution Foundation, said:

"The UK’s recent run of poor economic data hasn’t yet fed through into the public finances. While high spending in December put the borrowing figures in a worrying light, tax receipts remain strong. Crucially, cash measures suggest borrowing was in line with the OBR forecast nine months into the fiscal year.

"However, with tax returns due at the end of this month, and market jitters adding further uncertainty around UK debt servicing costs, there is still plenty for the Chancellor to worry about ahead of the OBR’s March forecast and the Spending Review expected later in the spring."