Britain’s government borrowed significantly more than anticipated in June, according to official data published on Friday, underscoring the budget challenges facing

Prime Minister Keir Starmer’s new administration.

Public sector net borrowing, excluding state-controlled banks, reached £14.5 billion ($18.75 billion) last month, surpassing the £11.5 billion increase projected by a Reuters poll of economists.

Dennis Tatarkov, Senior Economist at KPMG UK, commented that the data revealed “the daunting task” for the new government in funding its agenda without worsening public finances.

Finance Minister Rachel Reeves is expected to announce her first budget after the summer recess of parliament. Both she and Starmer have ruled out increases in income tax, corporation tax, and value-added tax rates, limiting their options for improving public services and boosting investment.

The borrowing figure for June was £2.9 billion higher than anticipated by Britain’s budget watchdog, whose forecasts underpin the tax and spending plans of British governments. In the first three months of the financial year starting in April, borrowing exceeded projections by £3.2 billion, according to the Office for Budget Responsibility.

The Office for National Statistics reported that June’s borrowing was the lowest for the month since 2019. However, the deficit was exacerbated by a £1.2 billion drop in social security contributions compared to June 2023, a result of cuts implemented by former Prime Minister Rishi Sunak before the July 4 election that brought Starmer’s Labour Party to power. Photo by acediscovery, Wikimedia commons.