Iran war could blow a £30BILLION hole in the UK government borrowing plans

Iran war could blow a £30BILLION hole in the UK government borrowing plansGovernment borrowing was less than expected in the last financial year - but Chancellor Rachel Reeves faces a "daunting" time ahead before of the economic impact of the Middle East conflictMoneyGraham Hiscott Business and Consumer Editor11:24, 23 Apr 2026Updated 11:24, 23 Apr 2026View 3 ImagesChancellor Rachel Reeves may have to make more tough decisions because of an energy shock from the Iran war(Image: Ian Vogler / Daily Mirror)The Iran war could force the government to borrow an extra £30billion this year, experts have warned.‌A predicted shock to the economy from the war means a “daunting” year ahead, in a setback to Chancellor Rachel Reeves and Labour.‌It comes as pressure grows on the government to dig deep to ease the pressure of higher power bills on low-income households and energy-hungry firms.‌Figures from the Office for National Statistics showed the government borrowed £132billion in the year to March, nearly £20billion less than the year before.It was also £700million below that forecast by watchdog the Office for Budget Responsibility (OBR). Borrowing in March alone was £12.6billion, the lowest figure for the month since 2022, but more than expected.View 3 ImagesThe impact of Donald Trump and Israel's war with Iran has already pushed up UK government debt interest payments (Image: Brendan SMIALOWSKI / AFP via Getty Images)‌Elliott Jordan-Doak, senior UK economist at Pantheon Macroeconomics, said: “The boost for Ms Reeves will likely prove temporary, with a more daunting 2026/27 ahead.”While soaring pump prices have caused misery for motorists, it is expected to rake in higher VAT for the Treasury, which is also predicted to get a boost from windfall taxes on North Sea producers.However, that risks being more than offset by an expected hit to the economy from the energy shock that could dent the take from other taxes.‌At the same time, under-pressure firms are exp...