An unexpected rise in UK borrowing and higher government debt costs means government help with energy bills, which are predicted to rise due to the Iran war, is less likely, economists have said.
Borrowing rose to £14.3bn in February to the second highest level for that month since records began, official figures show.
The figure, which measures the difference between total public sector spending and tax income, is for the month before the start of the US-Israel war with Iran.
The cost of government borrowing has jumped since the start of the conflict as higher fuel costs have pushed up inflation fears.
Experts have said the financial position this puts the government in makes it harder for the government to offer assistance on energy bills.
Ruth Gregory, deputy chief UK economist, at Capital Economics said: “We doubt there is scope for a large-scale fiscal support package like that seen in 2022, even in more extreme scenarios in which the conflict in the Middle East escalates further.”
The ONS said borrowing was £2.2bn higher than in February last year and much higher than the £8.8bn economists had expected it to be.
An increase in government tax receipts was outweighed by a rise in spending and the timing of government debt interest payments, it added.
However, across the 11 months of the financial year to February, government borrowing was down.
The Treasury said it had the “right economic plan” and added “we are better prepared for a more volatile world”.
The Conservatives said Labour was “saddling the next generation with the cost of their failure to live within our means”.
Nabil Taleb, economist at PwC UK, said the increase in borrowing for February “partly reflects the timing of payments, with some interest due at the end of January falling into February because of the intervening weekend”.
The leap to the second highest borrowing for February on record, a number not adjusted for inflation, is a sharp change from the record surplus in January.
Lindsay James, investment strategist at Quilter, said there were some “glimmers of hope that government borrowing was beginning to be reined in as tax rises helped to create the largest January surplus on record”.
“The latest data out this morning, however, has put a swift end to that picture,” she added.
James said the about-turn in public sector finances was “largely due to record levels of interest payable, highlighting the sheer scale of debt interest the government is now facing”.
Around £1 in every £10 is still currently spent on debt interest, which ministers said needed to be addressed so more could be spent on policing, schools and the NHS.
The ONS provisionally estimated the amount of government debt to be at 93.1% of the size of the UK economy at the end of February 2026, which means it remains at levels last seen in the early 1960s.
Source: BBC
