Britain’s Budget Deficit Widens in February Due to Rising Costs and Past Inflation

In February, Britain experienced a larger-than-expected budget deficit, driven by increased cost-of-living payments and the lingering impact of past inflation on public finances, according to official data released on Thursday.

The public sector net borrowing, excluding state-owned banks, amounted to £8.401 billion last month, compared to £11.843 billion recorded a year ago. However, this figure surpassed economists’ expectations from a Reuters poll, which had forecasted a deficit of approximately £5.95 billion.

With just one month remaining in the 2023/24 financial year, the cumulative budget deficit for the year reached £106.8 billion. Although this represents a 4.1% decrease compared to the first 11 months of the 2022/23 financial year, it still falls short of earlier forecasts.

Earlier in March, the Office for Budget Responsibility had projected a budget deficit of £114.1 billion for the 2023/24 fiscal year.

The larger-than-expected deficit in February underscores the challenges faced by the British government in managing public finances amid rising costs and inflationary pressures.