UK April public-sector borrowing hits £24.3bn, highest since 2020 Covid, as debt-interest sets April record £10.3bn and motor-fuel sales plunge 10.2%

Public-sector net borrowing in the United Kingdom totalled £24.3 billion in April, the Office for National Statistics said on Thursday — £4.9 billion higher than a year earlier and the highest April figure since the Covid pandemic in 2020. ONS chief economist Grant Fitzner said the April number was "substantially higher" than the prior year, with higher tax receipts "more than offset by higher spending on benefits and other costs." Net social-benefit spending rose by £2.7 billion, which the ONS attributed largely to inflation-linked increases in benefits and the earnings-linked rise in the state pension. Debt-interest payments alone reached £10.3 billion, a record for the month of April and £0.9 billion above the prior April.

The figures landed alongside ONS data showing retail sales volumes fell 1.3 percent in April, the fastest monthly decline in almost a year and a reversal of the previous month's 0.6 percent rise. The drop was led by a 10.2 percent fall in motor-fuel sales, the largest monthly fall since November 2020. The ONS suggested motorists were "conserving fuel after stocking up in March," and clothing-store sales were also weak, partly attributed to "variable weather conditions." Petrol prices have spiked since the Iran war began, prompting analysts to cut UK growth predictions, with the Bank of England no longer expected to cut interest rates this year.

Ruth Gregory, deputy chief UK economist at Capital Economics, said the figures "highlight the deteriorating growth outlook and fragile fiscal backdrop that will face whoever is in 10 Downing Street." Rob Wood, chief UK economist at Pantheon Macroeconomics, estimated that debt-interest costs in 2026/27 will be about £15 billion higher than assumed in the March Spring Statement if gilt yields hold at current levels for the rest of the year, adding that "political risk" had pushed UK borrowing costs higher than they otherwise would be. Dennis Tatarkov, senior economist at KPMG UK, said borrowing was likely to remain elevated in the medium term, "potentially forcing the chancellor's hand to make more tweaks to fiscal policy at the time of the autumn Budget."

The Office for Budget Responsibility's March forecast — issued before the Iran war began — had Chancellor Rachel Reeves with a £23.6 billion headroom against her self-imposed rule of not borrowing for day-to-day spending in five years' time, a buffer now under acute pressure from both higher debt interest and weaker growth-driven tax receipts. The government on Thursday announced a series of cost-of-living measures — a VAT cut on family day-out tickets, free August bus journeys for under-16s in England, and cuts to import taxes on some basic foods — to be partly funded by changes to the tax regime for UK-based oil and gas companies.

Chief Secretary to the Treasury Lucy Rigby said the government was "cutting borrowing and debt — with our actions reducing government borrowing by over £20 billion last year," and argued the "non-negotiable fiscal rules will be all the more important to continue to protect [working families] as we face the consequences of the war that we have played no part in." Shadow chancellor Mel Stride highlighted that "debt-interest spending was the highest of any April on record" and tied the gilt-market move to political uncertainty: "The recent spike in borrowing costs shows markets are increasingly worried about Keir Starmer's replacement." Liberal Democrat Treasury spokesperson Daisy Cooper called the numbers "a clear sign of this government's failure to get Britain's economy growing again," while Reform UK deputy leader Richard Tice said borrowing was "out of control in April," blaming welfare spending and "wasteful overspending."