Government borrowing dropped in November, driven by increased tax revenue and reduced spending on debt interest, according to the Office for National Statistics (ONS). Borrowing for the month stood at £11.2bn, the lowest November figure since 2021 and £3.4bn lower than the same time last year. This brings total borrowing for the current financial year to £113.2bn, slightly above forecasts from the Office for Budget Responsibility (OBR).

The decrease in debt interest payments, down £4.7bn from last year to £3bn, was attributed to lower inflation. However, economists have warned that the respite may be short-lived, with rising inflation expected to push costs back up. Ruth Gregory, deputy chief UK economist at Capital Economics, described the lower-than-expected borrowing as a welcome boost for Chancellor Rachel Reeves but cautioned that a weakening economy might necessitate further tax rises or spending cuts.

Retail sales showed a modest increase of 0.2% in November, recovering from a 0.7% decline in October. While supermarkets reported stronger sales, clothing stores saw declines as consumers delayed spending. The ONS noted that its survey period did not include Black Friday, which fell on 29 November.

Economic challenges persist, with inflation reaching 2.6% in the year to November and economic growth stagnating. Analysts have highlighted ongoing pressures on public finances, urging the government to address weak growth and rising inflation to stabilise the economy.