Public sector pay rises gas leap in borrowing

Rachel Reeves’s inflation-busting pay deals and soaring debt interest helped to push public borrowing in October to the second-highest on record, according to official data.

The Office for National Statistics (ONS) said the government borrowed £17.4bn last month to cover the gap between tax revenues and public spending.

This was £4bn more than expected and the second highest October borrowing since monthly records began in January 1993.

The Chancellor announced £9.4bn of inflation-busting pay deals weeks after taking office, with teachers and NHS staff starting to see backdated pay rises from last month.

The ONS said central government spending rose by £2.5bn to £36.9bn “as pay rises and inflation increased running costs”.

Statisticians also highlighted that the government’s debt interest payments stood at £9.1bn last month, an increase of £0.5bn compared with a year ago and the highest October figure since records began in 1997.

The ONS also said borrowing in the previous financial year was £3.2bn higher than Britain’s budget watchdog predicted just a few weeks ago, at £125.1bn. The Office for Budget Responsibility (OBR) expects the deficit to rise again this year to £127.5bn.

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