Nick Ridpath, research economist at the Institute for Fiscal Studies, noted government borrowing for the year to date had continued to exceed forecasts from the OBR, “to the tune of around £10bn”.
Mr Ridpath said that while the borrowing figures should not be given too much weight, ahead of the Budget they highlighted the uncertainty around pressures on spending and tax revenues and the “stubbornly high costs of servicing government debt”.
The chancellor needs to find more money in her 26 November Budget to meet her self-imposed rules for government finances, which she has described as “non-negotiable”.
The two main rules are:
The BBC understands that newer assessments from the OBR have put the gap in public finances that Reeves needs to fill at £20bn.
Mr Ridpath said: “Operating with minimal fiscal margin for error is risky, and this is one reason why the chancellor might sensibly take steps to increase her so-called ‘fiscal headroom’ at next week’s Budget.”
Chief secretary to the Treasury James Murray said the government aimed to reduce borrowing over the course of the parliament, with £1 of every £10 in taxpayer money currently spent on paying interest on national debt.
“That money should be going to our schools, hospitals, police and armed forces,” he said.
“That is why we are set to deliver the largest primary deficit reduction in both the G7 and G20 over the next five years – to get borrowing costs down.”
Shadow chancellor Sir Mel Stride said borrowing so far this financial year had been the highest on record outside the pandemic.
“If Labour had any backbone, they would control spending to avoid tax rises next week,” he said.