The UK’s economic outlook has taken a sharp turn for the worse, with newly released figures showing a dramatic overshoot in public borrowing—raising serious concerns over the government’s fiscal control and sparking fears of a looming financial crisis.

Chancellor Rachel Reeves, who once pledged to restore stability and uphold fiscal discipline, is now facing intense scrutiny. Despite her background as an economist and repeated assurances to safeguard public finances, the latest data suggests the government may be losing its grip.

According to figures released by the Office for National Statistics (ONS), the UK borrowed £151.9 billion in the financial year ending March—£15 billion more than projected and £20 billion higher than the previous year. March alone saw £16.4 billion added to the national debt, marking the third-highest borrowing level for that month since records began.

While global markets showed signs of optimism earlier this week—bolstered by signals from the US, including a softer stance from Donald Trump on Chinese tariffs—the UK’s fiscal performance stood in stark contrast, highlighting domestic vulnerabilities.

Several factors have contributed to the worsening figures. Substantial public sector pay deals, agreed in the early weeks of the current government, have inflated wage costs across government departments. Spending has surged, particularly in areas such as energy policy under Ed Miliband’s leadership, and local councils are struggling to meet rising demands on welfare amid an influx of asylum seekers.

Revenue generation has also faltered. With the economy stagnating, corporate tax receipts have disappointed, as struggling businesses post weaker profits. At the same time, consumer spending has slowed, reducing VAT income. These borrowing figures, still deemed “provisional,” are likely to worsen once final calculations are completed.

Looking ahead, fiscal pressures are expected to intensify. The increase in National Insurance contributions will significantly affect the public sector, adding to employment costs for the government’s 6.1 million workers. Meanwhile, major employers such as Morrisons are cutting jobs and closing outlets to manage costs—trends that will further suppress income tax and VAT revenues.

The ONS reported that borrowing last year amounted to 5.3% of GDP—a striking figure for a period absent of a major external crisis. With continued fiscal slippage, some analysts believe the real figure may already exceed 6%, with more strain to come over the summer.

So far, the Chancellor has proposed cuts to welfare and outlined “efficiency savings,” but critics argue these measures are unlikely to deliver the promised fiscal relief. Reeves has ruled out tax increases in the upcoming autumn statement, but even if she reverses course, the capacity to extract more from a struggling economy may be limited.

With ministers continuing to authorize high levels of spending and no immediate signs of a course correction, concerns are mounting that the UK is on an unsustainable fiscal path. If current trends persist, economists warn the country could be heading toward a full-scale financial crisis.