Britons to 'pay the price' as Rachel Reeves's borrowing soars to £10.7bn and growth plan stumbles - 'Another major blow!'

The Office for National Statistics (ONS) reported that public sector net borrowing was £100million more than in February 2024.

The figure was £4.2bn higher than had been projected by the Government's official forecaster, the Office for Budget Responsibility.

Overall spending on public services increased compared with the same month last year, with social benefits and investment spending surpassing forecasts.

Central government spending totalled £93bn in February, £3.8bn more than the same month last year under the Conservative government.

Darren Jones, Chief Secretary to the Treasury, defended the Government's approach to public finances saying: "We must go further and faster to create an agile and productive state that works for people."

Jones emphasised the Government was "going through every penny of taxpayer money line by line" to ensure it supports Britain's future.

He added: "At the core of this urgent mission is sound public finances, based on our non-negotiable fiscal rules. This Government will never play fast and loose with the public finances."

Liberal Democrat Treasury spokeswoman Daisy Cooper criticised the borrowing figures as "yet another major blow to the Chancellor's faltering plan for growth".

She said: "The Chancellor has failed to turn the page of the years of Conservative economic vandalism".

She warned that "Reeves's jobs tax will hammer small businesses, painting herself into a corner on her own fiscal rules.

"The only way to rebuild our public services is through meaningful growth, but unless the Chancellor sees sense and scraps her jobs tax at the spring statement hardworking families and small businesses will continue to pay the price."

James Smith, developed market economist for ING, said the public finances are "operating on increasingly fine margins" while spending pressures remain high.

He predicted the Treasury would likely "curtail its future spending ambitions" and that tax rises in the autumn were "inevitable".

Isabel Stockton from the Institute for Fiscal Studies noted that "easy or risk-free options for the Chancellor are in short supply".

The figures come less than a week before Reeves delivers the Government's spring statement.

Reeves is not expected to make tax changes when she delivers the statement next Wednesday, but will be responding to new forecasts from the OBR.

Danni Hewson, AJ Bell head of financial analysis said: "Nothing in today’s borrowing figures will surprise Rachel Reeves but they do give a real insight into the scale of the challenge facing the chancellor when she comes to deliver her Spring Statement next week.

"With such geopolitical uncertainty, fiscal rules are important and breaking them would be costly.

"Not breaking them leaves the chancellor with few avenues to choose from, especially with her fiscal headroom almost certainly evaporated, and probably in deficit.

"Promises not to increases taxes will mean even fewer choices, more cuts to public spending and the increased likelihood that the unpopular fiscal drag of frozen tax thresholds will remain with us way beyond 2028."

Meanwhile, central government receipts rose by £3.2bn to £87.7bn for the month. Borrowing over the financial year to date was up nearly £15bn compared to the same period a year before.

The borrowing figure represents the difference between what the Government spends on the public sector and what it receives in income from tax and other receipts.

Defence spending is unlikely to be the only department requiring fresh cash injections in coming years.

The redirection of spending from one area to another, as seen with the foreign aid budget being used to fund higher military spending, can only go so far.