Warning over 'fragile' public finances as borrowing rises

Warning over 'fragile' public finances as borrowing risesImage source, Alex Segre/Getty ImagesImage caption, May's borrowing figure was higher than the OBR's forecastPublished19 June 2026849 CommentsThe UK borrowed £23.3bn in May, according to official figures, up almost a third on the same month last year.May's borrowing figure — the difference between spending and income from taxes — was £5.6bn higher than forecast by the Office for Budget Responsibility (OBR), the independent fiscal watchdog."The big picture is that the public finances are fragile," said Capital Economics deputy chief UK economist Ruth Gregory. She said this would constrain whoever is Prime Minister.Greater Manchester mayor Andy Burnham was elected MP for Makerfield in a by-election, paving the way for him to launch a leadership challenge against the Prime Minister."Spending on debt interest, public services, investment and benefits all increased in May 2026, compared with last May," ONS statistician Tom Davies said.This outweighed higher tax receipts, he added.The OBR forecast was made in March, at which point the impact of the war in the Middle East had not yet become clear.The Office for National Statistics (ONS) said interest payable on government debt jumped to £11.7bn – the highest ever recorded in any May.Danni Hewson, head of financial analysis at AJ Bell, said that much of the jump in borrowing costs was the result of higher inflation.Inflation jumped when the Iran conflict broke out and is expected to rise further due to the knock-on effects of higher oil prices.Hewson said: "Long-term borrowing costs have been creeping up and will be monitored closely if the anticipated Labour leadership contest gets under way."Burnham has drafted in economic heavyweights to help shore up his credentials and has pledged to follow the existing fiscal rules, which includes not borrowing to fund day-to-day spending."Susannah Streeter, chief inves...