Government borrowing jumps despite boost from national insurance hike
It followed the move by Rachel Reeves in April to increase NICs for employers, which has seen wage costs soar for firms across the UK as they also faced a rise in the minimum wage in the same month.
In spite of this, borrowing still surged to £17.7 billion last month, the second highest figure on record for May, surpassed only at the height of Covid.
The ONS said May borrowing was £700 million higher than a year earlier, though it was slightly less than the £18 billion most economists had been expecting.
Borrowing for the first two months of the financial year to date was £37.7 billion, £1.6 billion more than the same two-month period in 2024.
Rob Doody, deputy director for public sector finances, said: 'Last month saw the public sector borrow £0.7 billion more than at the same time last year, with only 2020, affected as it was by Covid-19, seeing higher May borrowing in the time since monthly records began.
'While receipts were up, thanks partly to higher income tax revenue and national insurance contributions, spending was up more, affected by increased running costs and inflation-linked uplifts to many benefits.'
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