Chancellor responds to public sector finances statistics

The Chancellor responded to ONS January public sector finances statistics.

Chancellor of the Exchequer, Jeremy Hunt, said:

“We are rightly spending billions now to support households and businesses with the impacts of rising prices – but with debt at the highest level since the 1960s, it is vital we stick to our plan to reduce debt over the medium-term. 

“Getting debt down will require some tough choices, but it is crucial to reduce the amount spent on debt interest so we can protect our public services.”

Additional information

• The government’s fiscal rules require that the UK’s national debt must fall as a share of GDP by the fifth year of a rolling five-year period; and that public sector borrowing in the same year must be below 3% of GDP.
• Overall, Autumn Statement policy decisions reduced borrowing by £55 billion in 2027-28, and the OBR forecast in November that both of the fiscal rules will be met a year early in 2026-27.
• Debt is currently at over £2.4 trillion, its highest level since the 1960s, and the OBR expect borrowing this financial year to be more than double pre-pandemic levels.
• Headroom against our fiscal rules is low by historical standards - £15.3 billion lower than the average headroom against previous fiscal mandates.  It is important to preserve headroom to avoid the need to rapidly change tax or spending policy to respond to economic changes. Interest rates would need to be just 0.4ppts higher to wipe out the headroom against the debt falling rule.
• We shouldn’t read too much into monthly data releases. There is significant uncertainty and volatility which poses clear risks to the fiscal position. The OBR will produce an updated forecast alongside the Spring Budget.