Shadow Chancellor Mel Stride said Labour’s “record high taxes and irresponsible spending have weakened the economy”, with inflation still above target, a stagnant economy and that Labour had “no growth strategy”.
But another factor that helped the government’s finances was that it spent less on interest payments on its debt, which offset the higher costs of public service and benefits, said the ONS’s economist Grant Fitzner.
The chancellor will give an update on the country’s finances on 3 March, which will include new forecasts from the Office for Budget Responsibility on which direction the UK’s balance sheet is expected to go.
Reeves has been previously criticised for her public borrowing rules, which stipulate that day-to-day government spending should be financed by tax receipts, and that the UK should only borrow to finance infrastructure projects or investments.
On Thursday, the Treasury defended Reeves’ borrowing rules, which she says are “non-negotiable”.