UK public borrowing surged to £17.8 billion ($21.9 billion) in December, an increase of £10 billion from the same month in 2023, according to data released Wednesday by the Office for National Statistics (ONS).

This marks the third-highest borrowing figure for any December on record, adding strain to Prime Minister Keir Starmer's Labour government as it tackles a faltering economy. Chancellor of the Exchequer Rachel Reeves faces growing pressure to assure markets that her budget, reliant on tax hikes and higher borrowing, aligns with the government's growth objectives.

Economic headwinds have led to a weaker pound and a temporary rise in UK gilt yields, reflecting investor concerns. "To meet fiscal rules, the chancellor may need to raise taxes or cut spending," noted Alex Kerr of Capital Economics.

The higher borrowing is attributed to increased public service expenditures, benefit payments, and debt interest. The government maintains its commitment to fiscal discipline. "Economic stability is vital for growth, and we will maintain an iron grip on public finances," said Treasury official Darren Jones.

The fiscal outlook will be updated on March 26 by the Office for Budget Responsibility, determining if borrowing targets are met. Labour returned to power in July after 14 years under Conservative leadership.

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