UK borrowing exceeds forecasts in October as retail sales fall; energy price cap to rise in January – business live

Rolling coverage of the latest economic and financial newsOfgem’s decision to raise the UK price cap slightly, as we enter the coldest months of the year, is a blow.Richard Neudegg, director of regulation at Uswitch.com, calls it a “tedious disappointment’:“Millions of homes will now have their heating on to cope with this week’s cold snap, so the stubbornly high energy price cap is a stark reminder of the need for households to take matters into their own hands.“Industry forecasts had been predicting a small fall in the cap, so this increase will be a tedious disappointment for the millions of standard tariff customers who are already paying over the odds for their energy.The £17.4bn of public sector net borrowing in October was once again higher than the consensus forecast of £15.1bn and the OBR’s forecast of £14.4bn. This means that after seven months of the 2025/26 financial year, public sector net borrowing is a huge £9.9bn higher than the OBR forecast at the Spring Statement in March. The overshoot in the Chancellor’s chosen fiscal mandate of the current budget is even greater, at £15.1bn.Higher local authority spending, which is particularly subject to revision, has been a key source of the overshoot. But the slow growth of tax receipts has played a part too, which has been surprising given that high inflation has boosted consumer spending in nominal terms.The risk is that the fourth quarter isn’t a golden one for retailers and that higher taxes in the Budget restrain retail spending over the crucial festive period and going into next year. Continue reading...

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