How much can Rachel borrow before things break?

 September 2025 government borrowing reached £20.2 Bn for the month.  That's a Rachel sized black hole every month.   

To explain this, that number is how much more Rachel has spent than received in tax income.  £20 BILLION more than she has received in tax receipts.

That borrowing number is £1.6 Billion higher than September 2024.

The borrowing for the last six months is £99.8 BILLION - the second highest number since records began and the previous record was set as a result of the pandemic.

The borrowing is £7 BILLION more than the OBR forecast after her last budget.

So the inflation numbers released today were stubbornly high  at 3.8%.

So September borrowing was £1.6 BILLION higher than last year. That's 8.6% more than last year. 

I'll be generous and allow 3.8% for inflation so £706 MILLION of that is due to inflation.

In September 2024 10 year gilts were in the region of 3.7 - 3.9 % whereas in September 2025 10 year gilts were pretty stable at 4.6% (better than the borrowing high of 4.8% in  August). 

It's costing more to borrow than inflation so Rachel cant use a slight of hand to make the debt fade away.

Crudely borrowing costs on 10 year gilts are 21% higher than they were last September therefore most of the borrowing is actually to pay the interest on the borrowing. 

When one credit card is maxed out, use another credit card to pay the other credit card.....

How long can this go on before something breaks?

The speculation over what those with the broadest shoulders (the middle class not the super rich) will have to pay in the budget is rife.

The problem Rachel has is I dont think she is going to be able to raise more tax.

My myself as an example. Having disposed of a rental property this tax year which I have owned for 20+ years I have been hit with a massive capital gains tax bill.  I've ended up paying tax on money I spent on the property as I cant find receipts from 20+ years ago.   Not really profits.   Because of the size of the tax bill I've elected not to pay myself any more salary this year by not working as I refuse to pay any more tax.  I would be pushed into the marginal tax band paying 60%+ tax on additional earnings - why bother - my free time is worth more to me than the little money Rachel will allow me to keep.  

I'm not alone - I know other people making these choices - tax revenues will fall making the problem worse.  The Laffer curve is real.  

Measurement drives behaviour.

Eventually Rachel is going to have a crisis when she runs out of other people's money to tax or the bond markets wont let her take out any new credit cards to service the debt.


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