UK government borrowing narrowly undershoots forecasts; oil rising over $100 amid strait of Hormuz deadlock – business live
Introduction: UK borrowing undershoots forecasts
Good morning, and welcome to our rolling coverage of business, the financial markets and the world economy.
Britain’s government borrowing has dropped in the first full fiscal year of the Labour government, and slipped in slightly below forecasts.
New data from the Office for National Statistics this morning shows that the UK borrowed £132bn in the financial year ending in March – almost £20bn less than in the previous financial year to March 2025.
That’s also £700m less than the £132.7bn forecast by the Office for Budget Responsibility (OBR) for the financial year.
Both income tax and VAT brought in more revenue than the OBR expected, while Public sector spending was lower than forecast.
The resulting borrowing undershoot might cheer chancellor Rachel Reeves – who will be at the London Stock Exchange this morning for the official launch of the Retail Investing Campaign – except that the Iran war is now threatening her fiscal plans.
As Martin Beck, Chief Economist at WPI Strategy, explains:
“Public sector borrowing was down on a year-on-year basis in March, leaving the full-year deficit broadly in line with the Office for Budget Responsibility (OBR)’s forecast.
But the OBR’s expectation that borrowing will continue to fall this year will be challenged by the fallout from the conflict in the Middle East. For now, however, the implications for the government’s fiscal rules remain limited.
In March alone, the ONS reports, the UK borrowed £12.6bn to cover the gap between public sector spending and income – £1.4bn less than a year ago, and the lowest March borrowing since 2022.
The agenda
-
7am BST: UK public finances for March
-
7:30am BST: UK’s retail investment campaign launches at London Stock Exchange
-
9am BST: Eurozone ‘flash’ composite PMI for April
-
9.30am BST: UK ‘flash’ composite PMI for April
-
11am BST: CBI industrial trends report
-
1.30pm BST: US initial jobless claims
Key events
Oil over $100 as strait of Hormuz remains blockaded
The oil price is rising above $100 a barrel this morning, as supplies through the strait of Hormuz remain badly disrupted by the Iran war.
Yesterday, Iranian forces have seized two ships in the crucial waterway as the US and Iran both doubled down on imposing separate blockades of the shipping waterway.
Mohammad Bagher Ghalibaf, the speaker of the Iranian parliament and lead negotiator, said late on Wednesday that reopening the strait of Hormuz would be “impossible” while the US and Israel committed “flagrant” breaches of the ceasefire, including the US naval blockade, “the hostage-taking of the world’s economy” and “Zionist warmongering”.
The deadlock has raised doubts about whether stalled peace negotiations will resume.
Brent crude is up almost 1% this morning at $102.80 a barrel.
Introduction: UK borrowing undershoots forecasts
Good morning, and welcome to our rolling coverage of business, the financial markets and the world economy.
Britain’s government borrowing has dropped in the first full fiscal year of the Labour government, and slipped in slightly below forecasts.
New data from the Office for National Statistics this morning shows that the UK borrowed £132bn in the financial year ending in March – almost £20bn less than in the previous financial year to March 2025.
That’s also £700m less than the £132.7bn forecast by the Office for Budget Responsibility (OBR) for the financial year.
Both income tax and VAT brought in more revenue than the OBR expected, while Public sector spending was lower than forecast.
The resulting borrowing undershoot might cheer chancellor Rachel Reeves – who will be at the London Stock Exchange this morning for the official launch of the Retail Investing Campaign – except that the Iran war is now threatening her fiscal plans.
As Martin Beck, Chief Economist at WPI Strategy, explains:
“Public sector borrowing was down on a year-on-year basis in March, leaving the full-year deficit broadly in line with the Office for Budget Responsibility (OBR)’s forecast.
But the OBR’s expectation that borrowing will continue to fall this year will be challenged by the fallout from the conflict in the Middle East. For now, however, the implications for the government’s fiscal rules remain limited.
In March alone, the ONS reports, the UK borrowed £12.6bn to cover the gap between public sector spending and income – £1.4bn less than a year ago, and the lowest March borrowing since 2022.
The agenda
-
7am BST: UK public finances for March
-
7:30am BST: UK’s retail investment campaign launches at London Stock Exchange
-
9am BST: Eurozone ‘flash’ composite PMI for April
-
9.30am BST: UK ‘flash’ composite PMI for April
-
11am BST: CBI industrial trends report
-
1.30pm BST: US initial jobless claims
