Rachel Reeves is facing doubts over whether she can afford to help Brits with ‘Trumpflation’ today after grim government finance figures.
Government racked up the highest February borrowing on record outside of Covid at £14.3billion – far more than analysts had expected.
Bumper spending and debt interest payments outweighed a spike in revenues from Labour’s huge tax raids.
The gloomy picture came despite the Chancellor and Keir Starmer making clear they are ready to help households with a looming shock from Middle East carnage.
Markets suggest interest rates could now rise in the coming months, after the Bank of England warned over the impact of soaring oil and gas prices in the wake of the US-Israeli strikes.
Drivers are already feeling the pain at pumps, and energy bills are in line to rise by more than a fifth when the cap changes in July.
The ONS said public sector borrowing was £2.2billion higher last month than in February 2025
Rachel Reeves is facing doubts over whether she can afford to help Brits with ‘Trumpflation’ today after grim government finance figures
Some of the deterioration was down to debt interest being paid at the beginning of February rather than the end of January
The ONS said public sector borrowing was £2.2billion higher last month than in February 2025.
Most economists had pencilled in borrowing of £8.8billion.
Some of the deterioration was down to debt interest being paid at the beginning of February rather than the end of January, as a result of when the weekend fell. January had seen the government enjoy a large surplus.
Over the 11 months of the financial year so far borrowing stood at £125.9billion, £11.9billion less than in the same period the previous year.
Central government raked in £1,016.7billion in revenues with one month left in the financial year – £79billion more than the equivalent period in 2024-25.
Some £32.7billion of that was extra income tax, £7.6billion VAT, and £4.3billion Corporation Tax.
But spending was up £65.2billion, including £20billion extra on social security – underpinned by a sharp rise in benefits levels – and a £13.5billion rise in debt servicing costs.
ONS senior statistician Tom Davies said: ‘Borrowing was higher than the same month last year and was the second-highest February figure on record.
‘While receipts were up on last year, that was outweighed by a rise in spending, including the later timing of some debt interest payments.
‘However, across the first eleven months of this financial year as a whole, borrowing was down, as receipts increased by more than spending.’
Susannah Streeter of Wealth Club said: ‘Although Rachel Reeves has previously said there is room for some financial support to help alleviate high energy costs for businesses and consumers, she is highly constrained.
‘The longer the conflict continues, the less fiscal firepower the government will have to provide meaningful stimulus to an economy that was already stagnating before the conflict escalated.’
Chief Secretary to the Treasury James Murray said: ‘We have the right economic plan. Because of the choices we made before the conflict in the Middle East began, we are better prepared for a more volatile world. We doubled our headroom and borrowing was forecast to be lower than the G7 average.
‘We know there is more to do to. We have to stop spending £1 in every £10 on debt interest, so more money can be spent on policing, schools and the NHS.’
Over the 11 months of the financial year so far borrowing stood at £125.9billion, £11.9billion less than in the same period the previous year
Martin Beck, chief economist at WPI Strategy, said: ‘That the deficit numbers are broadly on track will be a welcome development for a government keen to preserve fiscal credibility at a time of unwelcome geopolitical and economic turbulence.
‘But that turbulence means the recent fiscal numbers may prove a poor guide to what comes next.
‘The shock to energy prices creates a double squeeze for the public finances if it persists.
‘Higher oil and gas prices would lift North Sea revenues, and stronger inflation could boost receipts from VAT and frozen tax allowances, but those gains would likely be outweighed by the damage to tax revenues from weaker growth and higher public spending on welfare, debt interest costs, and pressure for fiscal support for households and energy-intensive businesses.’