The UK government borrowed more than expected in the year leading up to March, driven largely by higher spending on wages and benefits, according to official data.

Public sector borrowing — the gap between government spending and tax income — reached £151.9 billion, £20.7 billion more than the previous year and well above the £137.3 billion forecast by the Office for Budget Responsibility.

This jump in borrowing comes as Chancellor Rachel Reeves heads to the IMF and World Bank meetings, where she’ll meet international finance ministers and advocate for a trade deal with the US.

The UK, like many nations, is still grappling with tariffs on goods entering the US. These trade barriers, introduced during Donald Trump's presidency to boost American manufacturing, have contributed to the IMF slashing the UK’s 2025 growth forecast from 1.6% to 1.1%.

Rising inflation and borrowing costs are also weighing on the UK economy. While the government has made economic growth a top priority, progress has been slow. Businesses face higher taxes, and households continue to deal with increasing costs.

According to Grant Fitzner, chief economist at the ONS, despite a solid increase in tax revenues, spending rose even faster — mainly due to inflation-linked costs, including bigger wage and benefit bills. He noted that by the end of the financial year, national debt stood at nearly the same size as the entire UK economy, a level not seen since the early 1960s.

In March alone, borrowing reached £16.4 billion — the third-highest March figure since records began in 1993. Interest payments on government debt also climbed by £1.3 billion to £4.3 billion for the month.

Some economists warn that more borrowing could force the chancellor to consider spending cuts or tax hikes in the Autumn Budget to meet fiscal rules. Ruth Gregory of Capital Economics said Reeves might soon need to raise funds again to stick to her own financial guidelines.

Treasury Chief Secretary Darren Jones stressed that the government is committed to fiscal discipline. "We’re going through every penny of taxpayer money line by line," he said, aiming to eliminate waste.

Meanwhile, Shadow Chancellor Mel Stride described the figures as "alarming but not surprising," criticizing what he called the high cost of Reeves' policy choices.