Government borrowing overshoot sharpens the fiscal challenge

Martin Beck, Chief Economist | Economic Consulting and Analysis

Government borrowing has overshot forecasts for a second month, underlining the Treasury’s limited fiscal room amid weak growth and high debt interest costs. Lower energy prices and easing rate expectations offer some relief, but do not fundamentally change the underlying arithmetic. Andy Burnham’s by-election victory adds political uncertainty, with markets sensitive to any shift towards looser fiscal policy.