\n<\/p>\n
The UK borrowed \u00a323.3bn in May, according to official figures, up almost a third on the same month last year.<\/b><\/p>\n
May’s borrowing figure \u2014 the difference between spending and income from taxes \u2014 was \u00a35.6bn higher than forecast by the Office for Budget Responsibility (OBR), the independent fiscal watchdog.<\/p>\n
“The big picture is that the public finances are fragile,” said Capital Economics deputy chief UK economist Ruth Gregory. She said this would constrain whoever is Prime Minister.<\/p>\n
Greater Manchester mayor Andy Burnham was elected MP for Makerfield<\/a> in a by-election, paving the way for him to launch a leadership challenge against the Prime Minister.<\/p>\n “Spending on debt interest, public services, investment and benefits all increased in May 2026, compared with last May,” ONS statistician Tom Davies said.<\/p>\n This outweighed higher tax receipts, he added.<\/p>\n The OBR forecast was made in March, at which point the impact of the war in the Middle East had not yet become clear.<\/p>\n The Office for National Statistics (ONS) said interest payable on government debt jumped to \u00a311.7bn \u2013 the highest ever recorded in any May.<\/p>\n Danni Hewson, head of financial analysis at AJ Bell, said that much of the jump in borrowing costs was the result of higher inflation.<\/p>\n Inflation jumped when the Iran conflict broke out and is expected to rise further due to the knock-on effects of higher oil prices.<\/p>\n Hewson said: “Long-term borrowing costs have been creeping up and will be monitored closely if the anticipated Labour leadership contest gets under way.<\/p>\n “Burnham has drafted in economic heavyweights to help shore up his credentials and has pledged to follow the existing fiscal rules, which includes not borrowing to fund day-to-day spending.”<\/p>\n Susannah Streeter, chief investment strategist at Wealth Club, said investors seem to have priced in the likelihood of a Labour leadership challenge.<\/p>\n “For now, that may be because Andy Burnham has promised to be more cautious about spending by largely sticking to fiscal rules. <\/p>\n “His pledge to bring down huge welfare costs, partly to fund higher defence spending<\/a>, is a signal that he is positioning himself closer to the political centre, which may be providing some reassurance.”<\/p>\n