{"id":284391,"date":"2025-07-23T05:24:15","date_gmt":"2025-07-23T05:24:15","guid":{"rendered":"https:\/\/www.europesays.com\/uk\/284391\/"},"modified":"2025-07-23T05:24:15","modified_gmt":"2025-07-23T05:24:15","slug":"britain-is-drowning-in-debt-as-uk-borrowing-soars-and-pressure-grows-for-major-tax-hikes","status":"publish","type":"post","link":"https:\/\/www.europesays.com\/uk\/284391\/","title":{"rendered":"Britain is drowning in debt as UK borrowing soars and pressure grows for major tax hikes"},"content":{"rendered":"

Britain is drowning in debt with borrowing jumping to a five-year high<\/a>, the latest figures reveal.<\/p>\n

Rachel Reeves<\/a> will now face intensifying pressure to put up taxes to deal with the spiralling cost of servicing the debt pile.<\/p>\n

Borrowing, which makes up the shortfall between the Government’s income through tax and the amount it spends, climbed last month to a larger than expected \u00a320.7billion.<\/a><\/p>\n

That was the highest level for June since 2020 and \u00a36.6billion more than a year ago.\u00a0<\/p>\n

The surge was fuelled by a sharp increase in debt interest payments, up from \u00a38.4billion to \u00a316.4billion.<\/p>\n

The figures highlight the staggering cost of servicing the UK’s debt mountain, which now stands at a towering \u00a32.87trillion<\/a>. Debt interest payments are expected to surpass \u00a3110billion this financial year.<\/p>\n

The Chancellor told a House of Lords committee hearing yesterday that the UK was ‘still very reliant on the goodwill of strangers’ who finance Britain’s debt by buying government bonds.<\/p>\n

She added: ‘I’m a Labour politician. I don’t think there’s anything progressive about spending \u00a3100billion a year, often to US hedge funds, when I would rather spend that money on the health service or on defence or on better schools.’<\/p>\n

\"Rachel <\/p>\n

Rachel Reeves will now face intensifying pressure to put up taxes to deal with the spiralling cost of servicing the debt pile<\/p>\n

Your browser does not support iframes.<\/p>\n

Ms Reeves said that meant she would stick to her fiscal rules, which require the Government to balance the books on day-to-day spending and target an eventual reduction in debt.\u00a0<\/p>\n

Failure to do so could mean bond investors demand even higher rates to lend to the UK. Yields have already risen since Labour came to power a year ago. Higher inflation also contributes to raise debt interest costs.<\/p>\n

Bank of England governor Andrew Bailey told MPs in a separate parliamentary hearing that he was ‘not unconcerned’ by the rising cost of borrowing<\/a>.<\/p>\n

The dire financial situation will add up to tough decisions in Ms Reeves’ autumn Budget, when she could face filling in a financial black hole of more than \u00a320billion<\/a> in order to meet her fiscal rules.<\/p>\n

Her predicament has been worsened after the Government caved in over welfare reforms that could have saved \u00a35billion a year.\u00a0<\/p>\n

Tom Clougherty, from think-tank the Institute of Economic Affairs, said the borrowing figures meant tax rises were ‘inevitable’.<\/p>\n

‘Given the country’s deepening economic malaise, high borrowing costs, and the Government’s failure to implement even minor spending cuts, it is hard to see another way out,’ he added.<\/p>\n

Speculation is rife the Chancellor will raise money through measures such as freezing income tax thresholds \u2013 dragging millions into paying tax at higher rates \u2013 or raiding pension savings.\u00a0<\/p>\n

\"Bank <\/p>\n

Bank of England governor Andrew Bailey told MPs in a separate parliamentary hearing that he was ‘not unconcerned’ by the rising cost of borrowing<\/p>\n

Some suggest Ms Reeves could even abandon election pledges not to increase income tax, employee National Insurance or VAT.<\/p>\n

Another option could be a hike on business taxes but that would bitterly dismay firms still reeling from the Chancellor’s \u00a325billion hike in employer National Insurance contributions.<\/a><\/p>\n

The employer NI hike, which took effect in April, has delivered an extra \u00a37.5billion to Treasury coffers so far this year.<\/p>\n

Hated inheritance tax has also brought in \u00a32.2billion, up by more than \u00a3100million since last year.\u00a0<\/p>\n

Shadow Chancellor Sir Mel Stride said: ‘Rachel Reeves is spending money she doesn’t have<\/a>. Make no mistake, working families will pay the price for Labour’s failure and costly U-turns.’<\/p>\n

The borrowing fears add to the darkening economic picture under Labour after unemployment rose, GDP shrank for two months in a row and inflation hit 3.6 per cent, the highest level since the start of last year.<\/p>\n

And it comes after the Office for Budget Responsibility raised fears over the state of the public finances,<\/a> saying Britain ‘cannot afford the array of promises that it has made to the public’.<\/p>\n

Ms Reeves would not commit to lowering taxes but said she wanted to reduce the tax burden by increasing GDP<\/a>.<\/p>\n

Appearing before the House of Lords economic affairs committee, she again refused to rule out a wealth tax, saying tax is ‘a matter for the Budget’.<\/p>\n

But she called on employers to hire British workers, saying: ‘I do not think that businesses should always resort to the immigration lever to fill vacancies.’<\/p>\n","protected":false},"excerpt":{"rendered":"Britain is drowning in debt with borrowing jumping to a five-year high, the latest figures reveal. Rachel Reeves…\n","protected":false},"author":2,"featured_media":284392,"comment_status":"","ping_status":"","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[5018,3,4],"tags":[25548,936,748,92,393,4884,8414,12,1144,619,712,16,15,1764],"class_list":{"0":"post-284391","1":"post","2":"type-post","3":"status-publish","4":"format-standard","5":"has-post-thumbnail","7":"category-britain","8":"category-uk","9":"category-united-kingdom","10":"tag-andrew-bailey","11":"tag-bank-of-england","12":"tag-britain","13":"tag-dailymail","14":"tag-england","15":"tag-great-britain","16":"tag-labour","17":"tag-news","18":"tag-northern-ireland","19":"tag-rachel-reeves","20":"tag-scotland","21":"tag-uk","22":"tag-united-kingdom","23":"tag-wales"},"share_on_mastodon":{"url":"https:\/\/pubeurope.com\/@uk\/114900884840074128","error":""},"_links":{"self":[{"href":"https:\/\/www.europesays.com\/uk\/wp-json\/wp\/v2\/posts\/284391","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/www.europesays.com\/uk\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/www.europesays.com\/uk\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/www.europesays.com\/uk\/wp-json\/wp\/v2\/users\/2"}],"replies":[{"embeddable":true,"href":"https:\/\/www.europesays.com\/uk\/wp-json\/wp\/v2\/comments?post=284391"}],"version-history":[{"count":0,"href":"https:\/\/www.europesays.com\/uk\/wp-json\/wp\/v2\/posts\/284391\/revisions"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/www.europesays.com\/uk\/wp-json\/wp\/v2\/media\/284392"}],"wp:attachment":[{"href":"https:\/\/www.europesays.com\/uk\/wp-json\/wp\/v2\/media?parent=284391"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/www.europesays.com\/uk\/wp-json\/wp\/v2\/categories?post=284391"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/www.europesays.com\/uk\/wp-json\/wp\/v2\/tags?post=284391"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}