IFS - Today’s ONS figures highlight uncertainty around fiscal forecasts

23 Apr 2025 02:21 PM

Public finance data out today show that borrowing overshot the official forecast made at last month's Spring Statement by £15 billion.

Responding to today’s ONS figures on public finances, Nick Ridpath, a Research Economist at the Institute for Fiscal Studies, said:

“Today’s data show higher-than-expected government borrowing over the last financial year, including higher than was forecast in the Spring Statement just last month. And it is much higher than was forecast in the March 2024 Budget. This serves to highlight the uncertainty surrounding these – or indeed any – fiscal forecasts. The Chancellor’s fiscal rules, which apply to forecast borrowing in 2029–30, are only being met by a hair’s breadth. Today’s data highlight the clear risk that is being taken with that strategy.”

Today, the Office for National Statistics published new figures on government revenues, spending and borrowing, which include the initial outturn of borrowing over the whole of the financial year 2024–25.    

• Over this financial year, government spent £152 billion more than it received in taxes and other revenues. This is £15 billion higher than the £137 billion forecast last month in the Spring Statement. That forecast was finalised with limited outturn data available past January 2025.
• Today’s figures suggest that over the course of the year, successive forecasts by the Office for Budget Responsibility (OBR) have underestimated government borrowing, despite sequential upward revisions in each one. Borrowing in 2024–25 was forecast to be £87 billion in the March 2024 Budget, and this was revised up to £127 billion in Rachel Reeves’s first Budget of October 2024, largely due to a big increase in forecast spending on public services.
• The government spent £105 billion servicing its debt across the financial year, £16 billion higher than was expected a year ago. This is the consequence of much government debt being effectively financed at short-term rates of interest, and those rates being higher than was expected. The level of debt interest spending remains more than double what it was prior to the pandemic and the OBR forecasts that it will continue to grow over the next five years.

These are preliminary figures and will be revised and revised again. For the Chancellor’s fiscal rules, the outlook going forward matters more than preliminary snapshots of the fiscal situation right now. But the data highlight the risks of targeting government borrowing in 2029-30 with minimal ‘headroom’ of just £10 billion, when there is such volatility in growth, tax revenues, and debt servicing costs, even over a much shorter timeframe.