The UK government borrowed £20.2bn in September - the difference between public income and spending - which is the highest level for the month since Covid.
The figure was in line with OBR forecasts but “cumulative borrowing is still significantly above the OBR forecast and the latest release still paints a picture of deteriorating public finances,” said RSM UK chief economist Thomas Pugh. “The chancellor will probably have to raise around £30bn at the budget in the autumn,” he added.
Elsewhere, Pizza Hut’s dine-in restaurant firm has gone into administration, while the finance chief at discount retailer B&M has quit after a £7m oversight. Meanwhile, challenger bank Zopa has released a new high-interest savings account offering a 4.75 per cent rate to customers, ahead of tomorrow’s inflation data which is likely to show a 4 per cent rate for September.
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Key points
- Government borrowing more than £20bn in September - highest since Covid
- Chancellor will 'have to raise £30bn' in next month's Budget
- The UK locations of all 68 Pizza Hut restaurants set to close
- Zopa launches 4.75% savings account
Stealth inheritance tax rises lead to record £4.4bn take for Treasury
15:00 , Karl MatchettThe government pulled in £4.4bn from inheritance tax (IHT) in the past six months as more families were “quietly” pulled into the net, data from the Treasury shows.
The amount raised between April and September this year is up 2.3 per cent and is due to be a record for the government.
The boost to the Treasury coffers is in part due to frozen thresholds which have remained in place for years, meaning more and more people are being dragged into the bracket where tax is required to be paid.
Stealth inheritance tax rises lead to record £4.4bn take for Treasury
Business and Money: Live news updates 21 October
08:07 , Karl MatchettMorning all, lots to come during the next few hours, starting with the latest UK financial data affecting you (or paid for by you in this case): inheritance tax levels, plus the latest borrowing data.
Next month’s Budget is on everyone’s agenda so these - plus tomorrow’s inflation figures - are important numbers.
UK borrowing costs top £20.2bn in September
08:12 , Karl MatchettGovernment borrowing costs hit £20.2bn in September, in line with OBR expectations but the highest for the month since Covid.
The figure was more than £1.5bn higher than the same period a year ago, while overall borrowing for the first half of the year is nearly £100bn.
ONS chief economist Grant Fitzner said: “Last month saw the highest September borrowing for five years.
“Debt interest, the cost of providing public services and benefits all increased compared with last year, more than offsetting the rise in receipts from central government taxes and national insurance contributions.
“Likewise, the first six months of the financial year saw the highest overall deficit since 2020.”
Rachel Reeves will 'have to raise around £30bn at the budget'
08:32 , Karl MatchettThomas Pugh, chief economist at tax and consulting firm RSM UK said today’s figures mean Rachel Reeves will need to find about £30bn in the Budget.
“Today’s release had a little bit of good news for the chancellor. Government borrowing came in almost bang in line with the OBR forecast in September, which is positive after August’s borrowing overshoot. What’s more, cumulative borrowing so far this year was revised down a little,” he said.
“The bigger picture, though, is that cumulative borrowing is still significantly above the OBR forecast and the latest release still paints a picture of deteriorating public finances. The chancellor will probably have to raise around £30bn at the budget in the autumn.
“Crucially, the current budget deficit, which is now what matters for the fiscal rules, came in at -£13.4bn, £1.2bn above the OBR forecast and is now cumulatively £13.0bn higher for the fiscal year so far. That is the number that matters for the chancellor’s fiscal mandate and is even less positive than the headline numbers suggest.
“Looking ahead to the budget in the autumn, we are pencilling in tax increases of around £30bn. We expect fiscal drag, NICs base broadening and a salami slicing of other tax increases to do the bulk of the work with some pencilled in spending cuts to help at the end of the decade.”
Trade talks about ‘hard yards’ rather than photo opportunities, says Starmer
08:45 , Karl MatchettWhisky negotiations with the US are about “the hard yards” rather than “one-off photo opportunities”, the Prime Minister has said in a rebuke to First Minister John Swinney.
Mr Swinney has made securing a deal to cut whisky tariffs with the US a key part of his premiership in recent months, meeting President Donald Trump on a number of occasions this year in the hopes of reducing the levies.
The First Minister’s involvement in the talks comes despite international trade being a reserved issue, with the UK Government in the lead.
Speaking to a group of Scottish journalists in Downing Street on Monday, Prime Minister Sir Keir Starmer said: “Negotiations and getting the trade deals you want… is about the hard yards of negotiation and that’s what we’ve been up to.”
More here:
Trade talks about ‘hard yards’ rather than photo opportunities, says Starmer
Reeves faces "tough job" to balance books, says expert
09:04 , Karl MatchettMore comment on the government borrowing numbers, with Danni Hewson, AJ Bell’s head of financial analysis, suggesting the government still has work to do to stimulate growth despite “admirably long term” changes already made.
“This set of government borrowing figures lays bare the tough job Rachel Reeves faces to try and balance the country’s books.
“The chancellor has hiked taxes on employers, announced infrastructure investments and planning reforms, and today promises to cut red tape for businesses. But all those tax-raising, growth-inducing measures haven’t been able to offset the weight piling up on the other end of the seesaw.
“Today’s world demands instant gratification and finding a magic money tree is a plot twist normally reserved for fairytales. In the real world this Budget is likely to be dry, difficult and divisive.”
The UK locations of all 68 Pizza Hut restaurants set to close
09:20 , Karl MatchettPizza Hut has revealed the locations of 68 restaurants which will close after the company behind its UK venues fell into administration.
It will also shut 11 delivery sites as part of a restructuring which will put 1,210 workers at risk of redundancy.
DC London Pie, the firm running Pizza Hut’s UK dine-in restaurants under a franchise deal, appointed administrators from corporate finance firm FTI on Monday.
American hospitality giant Yum! Brands, which owns the global Pizza Hut business, said it has now bought the UK restaurant operation in a pre-pack administration deal, saving 64 sites.
Here are the locations set to close:
The UK locations of all 68 Pizza Hut restaurants set to close
Nearly £10bn in interest on debt
09:40 , Karl MatchettMore now on those borrowing numbers.
Times figures show interest payments on government borrowing rose to £9.7bn in September.
Shown as a percentage of GDP, the overall total debt is 95.3 per cent.
Autumn house price bounce lower than usual in October
10:00 , Karl MatchettThe autumn asking price bounce among home sellers was lower in October than usual, according to a property website.
Across Britain, the average price of a property coming to the market for sale increased by 0.3% or £1,165 in October to reach £371,422, Rightmove said.
But the rise is below the 10-year average October bounce of 1.1%, as the high number of homes for sale limits sellers’ pricing power, the website added.
October typically sees a seasonal increase in activity and new seller asking prices as the market bounces back from a quieter summer period, but activity has not been strong enough to drive the usual autumn bounce in prices, the report said.
More here.
FTSE 100 climbs despite borrowing costs rising
10:22 , Karl MatchettA quick look at the stock market this morning now.
The FTSE 100 is up 0.18 per cent, down slightly from a fast start early on, while most European markets are flat or slightly down for the day.
Segro is up 2.8 per cent as the leader of the index, with data firm RELX, bank HSBC and AutoTrader Group the others up more than 1.5 per cent for the day.
At the other end it’s a day of red for miners - Antofagasta, Fresnillo and Endeavour are the three worst-performing stocks of the morning, the latter down 3 per cent.
Four million face debt concern as costs outweigh incomes
10:40 , Karl MatchettCitizens Advice say four million people across England and Wales are in a “negative budget”, with their essential costs outweighing their monthly income.
An additional 300,000 were £50 away from such a negative budget, the charity said.
People with negative budget have an average of more than £9,900 debt per household, CA reported.
For those near or in a negative budget, a single unexpected bill or cost can push them into debt which becomes increasingly difficult to get out of.
Pizza Hut is dying. Your favourite diner will be next
11:00 , Karl MatchettThe pizza giant, which at the height of its powers opened a new branch every week, has now collapsed into administration – and Salt Bae is on his knees, says James Moore. But it’s not just struggling restaurants that are in trouble.
Pension tax raid incoming, says finance CEO
11:53 , Karl MatchettThe CEO of financial advisory firm deVere Group, Nigel Green, says a pension tax raid in the upcoming Budget is inevitable.
“The numbers speak for themselves. Borrowing has surged far beyond expectations while growth remains flat and debt servicing costs are swallowing a larger share of national income,” he explains.
“When the Treasury finds itself under this kind of pressure, pensions are often first in line. They’re seen as an easy source of revenue that can be tapped quickly, even if the long-term consequences are severe.”
Cutting cash ISA limits would be a 'huge blow to millions'
12:30 , Karl MatchettRachel Reeves is reportedly back on the hunt to cut cash ISA allowances - a proposed move which got a lot of flack earlier this year.
Same again now, in truth.
Derence Lee, chief finance officer at Shepherds Friendly, said:
“Cash ISAs have long been an extremely useful tool for many people to save money effectively, and one of the core reasons is the annual £20,000 tax-free allowance. If implemented, a reduction to a limit of just £4,000 would deal a huge blow to the millions of people across the UK who rely on Cash ISAs for building their savings, particularly during this period of economic uncertainty.
“The ability to save tax-free helps people build emergency funds, plan for major life expenses, such as buying a first home, as well as secure their financial future without the burden of taxation eating away at their savings. Cutting the allowance so drastically could potentially discourage saving, and with the Bank of England revealing that over £49.8bn was deposited into Cash ISAs in 2024, it’s clear to see that savers value the security and benefits of these accounts.”
High street banks found to offer worse interest rates as new 4.75% account hits market
13:35 , Karl MatchettSome of the biggest high street banks are offering lower interest rates to customers than so-called challenger banks, along with demanding more from their clients in return, a new study shows.
Comparison site Finder analysed a total of 85 easy access savings accounts, spread across 33 different providers. The analysis included big-name high street banks including Bank of Scotland, Barclays, Halifax, HSBC, Lloyds Bank, Royal Bank of Scotland, Santander, The Co-op Bank, TSB and Virgin Money, plus Nationwide as a building society.
While the vast majority (85 per cent) of them had at least one requirement for customers to access it - such as opening a current account to get to the savings account - there was a clear skew towards more demands from high street banks, with fewer demands - and better rates - from challenger banks.
High street banks offer worse interest rates - as new 4.75% account hits market
B&M shares plunge as finance chief quits over ‘embarrassing’ accounting error
14:25 , Karl MatchettDiscount retailer B&M has slashed its profit guidance for the second time in a month, following the discovery of a £7m accounting error.
In a surprise announcement on Monday, the London-listed firm also confirmed its finance chief plans to step down.
The company stated that £7m in overseas freight costs were "not correctly recognised in cost of goods sold," an issue it linked to an operating system update earlier this year.
B&M shares plunge as finance chief quits over ‘embarrassing’ accounting error
