The October 2024 fiscal report reveals worsening public finances in the UK, with borrowing and debt reaching historically high levels. Public sector net borrowing (PSNB) was £17.4 billion, exceeding the £14 billion consensus and up on both September's downwardly revised £16.1 billion. It was £1.6 billion higher than in October 2023 and made for the second-highest October borrowing since 1993. The current budget deficit stood at £12.7 billion, reflecting increased reliance on borrowing for routine public sector activities.

Total public sector spending increased £3.3 billion on the year as increases in central government tax receipts were partially offset by a reduction in compulsory social contributions. This was largely because of the reductions in the main rates of National Insurance in early 2024. Debt interest payments reached £9.1 billion, the highest for October since 1997, driven by rising interest rates obligations. Borrowing in the financial year to October totalled £96.6 billion, the third highest on record.

Public sector net debt rose to 97.5 percent of GDP, a level last seen in the 1960s, highlighting fiscal vulnerabilities. Public sector net financial liabilities (PSNFL), the new government's preferred measure, stood at 83.7 percent of GDP, up 2.5 percentage points from last year but below net debt, potentially reflecting asset revaluations. Borrowing in October was £3.2 billion more than the £121.9 billion forecast by the Office for Budget Responsibility (OBR).

The UK RPI now stands at minus 26 and RPI-P at minus 37, showing economic activity lagging market expectations and underscoring the need for a balance between growth and fiscal sustainability.

Net borrowing is expected to fall from £16.61 billion in September to £14.0 billion last month.

The public sector net borrowing requirement (PSNB) is the difference between the sector's receipts and expenditure and so provides a simple measure of government fiscal policy. In response to the global economic crisis in 2008/09 the UK government introduced a number of measures designed to show the underlying state of public sector finances by omitting temporary distortions caused by financial interventions. It bases its fiscal policy on these measures. To this end, the underlying gauge of government borrowing watched most closely by financial markets is the PSNB-X which takes overall net borrowing (PSNB) but excludes public sector banks.

Changes in public sector finances can be used to determine the thrust of the government's fiscal policy. Generally speaking when the government has a rising deficit (or falling surplus) it is loosening its fiscal stance with a view to boosting economic activity. When its deficit is falling (or surplus rising), fiscal policy is being tightened in order to slow economic growth. However, sometimes changes in government financial positions can be due to factors outside of the government's control and do not signal an explicit shift in policy. This means that great care is needed in interpreting the data.