The government borrowed more than expected last year, placing more pressure on the public finances ahead of the full impact of US tariffs being felt on the UK economy.

Borrowing, the difference between spending and income from taxes, was ?151.9bn in the year to March, up ?20.7bn from the year before.

The official figures come as Chancellor Rachel Reeves is set to push for potential trade deal with the US in Washington later to avoid import taxes hitting UK exports.

The higher levels of borrowing has added to growing expectations that Reeves could cut public spending or raise taxes later this year in order to stick to her self-imposed borrowing rules.

In response to the figures, Darren Jones, chief secretary to the Treasury, reiterated that the chancellor's rules on borrowing were "non-negotiable", adding that the government would "never play fast and loose with the public finances".

Ruth Gregory, deputy chief UK economist at Capital Economics, said the borrowing overshoot "even before the influence from the tariff chaos is felt" raised the chances of "more tax hikes".

"Reeves may not be too far away from having to raise money again in the Autumn Budget, by cutting spending and/or raising taxes, to meet her fiscal rules," she added.

One of Reeves's main rules for the UK economy is not to borrow money to fund day-to-day spending.

But sluggish economic growth and higher interest rates on government borrowing in recent months have led to warnings that it will be difficult for the chancellor to stick to them without raising taxes.

The UK is one of many countries to be hit with tariffs on goods entering the US, with President Donald Trump looking to upend the long-established order of global trade in a bid to boost American manufacturing and jobs.

But Reeves is aiming to avoid the import taxes hitting UK exporters by agreeing a trade deal with the US. US Vice-President JD Vance has said there was a "good chance" of a trade deal.

On Tuesday, the International Monetary Fund, an influential global organisation, forecast that UK growth would be lower than previously expected for 2025 at 1.1%, down from 1.6%.

Governments like to see economic growth as it leads to more jobs and businesses being created, better living standards on average, and ultimately higher income through taxation.

The UK government has made growth its top priority, but the IMF said it would be stifled in part by tariffs on goods entering the US along with rising inflation and borrowing costs.

The Office for National Statistics (ONS) said the government borrowed almost ?15bn more than the ?137.3bn expected in the year to March due to increased spending on pay and benefits.

Grant Fitzner, chief economist at the ONS, said the rise in borrowing was despite the government receiving a "substantial boost in income" from taxation.

He added at the end of the financial year, debt remained "close to the annual value of the output of the economy, at levels last seen in the early 1960s".

The debt interest paid by the government increased to by ?1.3bn to ?4.3bn last month.

James Smith, a markets economist at ING, said the cost of government borrowing created a "very challenging environment for the government"

"I think it puts pressure on them to potentially raise taxes again later this year," he told the BBC's Today programme.

Jones said the government was going "through every penny of taxpayer money spent, line by line, for the first time in 17 years to tear out waste".

But shadow chancellor Mel Stride called the borrowing figures "alarming, but not surprising", adding that they "lay bare the price the British people are paying for Rachel Reeves' choices".

Liberal Democrat treasury spokesperson Daisy Cooper meanwhile called the figures "damning" and called on Reeves to scrap "her disastrous jobs tax". (BBC)

Update news