23 April 2026
If you are covering the latest UK public sector finances data, please see the following comment from Lindsay James, investment strategist at Quilter:
“The conflict in the Middle East has shown the UK economy remains very exposed to geopolitical shocks. However, there are some encouraging signs that rigid fiscal rules have been having the desired effect thus far, as today’s public sector finance data shows borrowing was £12.6 billion in March. This is £1.4 billion less than the same month last year, and the lowest March reading since 2022.
“Borrowing had been expected to be lower this year as the government had front loaded a lot of its spending plans into its early years, but things could get more difficult from here on out. With inflation on the rise, debt interest climbing again and gilt yields also becoming elevated once more, the fiscal headroom Chancellor Rachel Reeves had established could very quickly run out once again. As such, tax is likely to feature prominently as the lever to pull to help keep the public finances on steady ground, and we have already seen the burden this places on growth.
“With the potential for a lurch to the left in the event of a change of leadership, markets are likely to keep the yield premium in place for the UK, until it is clear growth can be sustained and constant taxation changes are not required at every budget. The conflict in the Middle East may have a very fragile ceasefire in place, but its ripple effects have been vast, and none more so than on the UK economy.”
