Warning UK borrowing rise makes energy bill help harder

An unexpected rise in UK borrowing and higher government debt costs means government help with energy bills, which are predicted to rise due to the Iran war, is less likely, economists have said.

Borrowing rose to £14.3bn in February to the second highest level for that month since records began, official figures show.

The figure measures the difference between total public sector spending and tax income and is for the month before the start of the US-Israel war with Iran.

The cost of government borrowing has jumped since the start of the conflict as higher fuel costs have pushed up inflation fears.

The ONS said borrowing was £2.2bn higher than in February last year and much higher than the £8.8bn economists had expected it to be.

An increase in government tax receipts was outweighed by a rise in spending and the timing of government debt interest payments, it added.

However, across the 11 months of the financial year to February, government borrowing was down.

Chief Secretary to the Treasury James Murray said the government had the "right economic plan" and added "we are better prepared for a more volatile world".

Shadow chancellor Sir Mel Stride said Labour was "saddling the next generation with the cost of their failure to live within our means".

Experts have said the financial position this government is in makes it harder for the government to offer assistance on energy bills.

Ruth Gregory, deputy chief UK economist, at Capital Economics said: "We doubt there is scope for a large-scale fiscal support package like that seen in 2022, even in more extreme scenarios in which the conflict in the Middle East escalates further."

She added that any monetary assistance the government does offer to households and businesses will likely be less than in 2022 because of its "worse fiscal position".

Charlie Bean, former deputy governor of the Bank of England, told the BBC the government "doesn't have the room for manoeuvrability" it had in 2022 after the energy price shock following Russia's invasion of Ukraine.

Danni Hewson, AJ Bell's head of financial analysis, said: "With the chancellor under pressure to act swiftly to protect households from the impact of the latest energy price shock, today's numbers won't make great reading."

Typical annual household energy bills could go up by £332 in July, according to the latest data from consultancy Cornwall Insight, but the figure is likely to change.

Nabil Taleb, economist at PwC UK, said the increase in borrowing for February "partly reflects the timing of payments, with some interest due at the end of January falling into February because of the intervening weekend".

The leap to the second highest borrowing for February on record, a number not adjusted for inflation, is a sharp change from the record surplus in January.

Lindsay James, investment strategist at Quilter, said there were some "glimmers of hope that government borrowing was beginning to be reined in as tax rises helped to create the largest January surplus on record".

"The latest data out this morning, however, has put a swift end to that picture," she added.

James said the about-turn in public sector finances was "largely due to record levels of interest payable, highlighting the sheer scale of debt interest the government is now facing".

Around £1 in every £10 is still currently spent on debt interest, which ministers said needed to be addressed so more could be spent on policing, schools and the NHS.

The ONS provisionally estimated the amount of government debt to be at 93.1% of the size of the UK economy at the end of February 2026, which means it remains at levels last seen in the early 1960s.

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