{"id":58637,"date":"2026-04-23T05:16:55","date_gmt":"2026-04-23T09:16:55","guid":{"rendered":"https:\/\/newssprinters.com\/index.php\/world\/uk-borrowing-lowest-for-three-years-but-iran-war-clouds-outlook\/23\/04\/2026\/"},"modified":"2026-04-23T05:16:55","modified_gmt":"2026-04-23T09:16:55","slug":"uk-borrowing-lowest-for-three-years-but-iran-war-clouds-outlook","status":"publish","type":"post","link":"https:\/\/newssprinters.com\/index.php\/world\/uk-borrowing-lowest-for-three-years-but-iran-war-clouds-outlook\/23\/04\/2026\/","title":{"rendered":"UK borrowing lowest for three years but Iran war clouds outlook"},"content":{"rendered":"

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Annual UK government borrowing has fallen to a three-year low, but analysts do not expect the improvement to last because of the impact of the Iran war.<\/p>\n

Borrowing, the difference between spending and income from taxes, fell \u00a319.8bn to \u00a3132bn in the year to March, the Office for National Statistics (ONS) said, the lowest since 2022-23.<\/p>\n

The total was slightly below the \u00a3132.7bn that had been predicted by the government’s independent forecaster, the Office for Budget Responsibility.<\/p>\n

However, analysts say borrowing could worsen this year if inflation picks up and if the government offers to support to some households to cope with higher energy bills.<\/p>\n

Ruth Gregory, deputy chief UK economist at Capital Economics, said the full impact from the energy price shock caused by the conflict “is still to come”.<\/p>\n

Since the outbreak of the US-Israeli war with Iran, energy prices have surged due to the effective closure of the Strait of Hormuz – a key waterway with usually carries about 20% of the world’s oil and liquid natural gas supplies.<\/p>\n

This has already pushed up petrol and diesel costs, and has started to increase the rate of inflation<\/a> – the pace at which prices rise.<\/p>\n

Last week, the International Monetary Fund (IMF) predicted<\/a> the energy shock from the Iran war would hit the UK the hardest of the world’s advanced economies.<\/p>\n

The IMF cut its estimate for UK growth this year to 0.8% from its previous prediction of 1.3%. Weaker economic growth is likely to lead to a slower increase in revenues from taxes.<\/p>\n

Gregory said: “We continue to think that the combination of some targeted energy price support, totalling about \u00a320bn, high interest rates and the weakening economy will mean borrowing rises from \u00a3132bn in 2025\/26 to about \u00a3145bn this year.”<\/p>\n

Elliott Jordan-Doak, senior UK economist at Pantheon Economics, said the chancellor was facing “a more daunting 2026\/27 ahead”.<\/p>\n

He estimated that government is facing an increase of about \u00a312bn in interest payments this year, and “any further fiscal support for households or businesses will require additional borrowing”.<\/p>\n

Last week, the International Monetary Fund (IMF) predicted<\/a> the energy shock from the Iran war would hit the UK the hardest of the world’s advanced economies.<\/p>\n

The ONS said borrowing in the month of March was \u00a312.6bn, which was higher than analysts had been expecting. However, the figure was \u00a31.4bn less than a year earlier, and the lowest March borrowing since 2022.<\/p>\n

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For the year to March, the ONS said borrowing as a proportion of GDP was 4.3% – the lowest since 2019-20, just before the Covid pandemic.<\/p>\n<\/p><\/div>\n

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“Although spending has risen this financial year, this was more than offset by increased receipts,” said ONS senior statistician Tom Davis.<\/p>\n

Chief Secretary to the Treasury, James Murray, said: “Our deficit is down \u00a319.8bn because of our plan to cut borrowing. In a volatile world the decisions we are taking are the right ones to keep costs down, take back our energy security and cut borrowing and debt.”<\/p>\n

Shadow chancellor Mel Stride said the annual deficit was “70% higher than was forecast when they [Labour] came to office”.<\/p>\n

“Labour have left Britain dangerously exposed to economic shocks,” he added.<\/p>\n

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[Getty Images] Annual UK government borrowing has fallen to a three-year low, but analysts do not expect the improvement to last because