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UK government borrowing came in higher than forecast in June, a setback for Chancellor of the Exchequer Rachel Reeves that has markets jittery and households bracing for tax hikes, according to Nigel Green, CEO of global financial advisory giant deVere Group. 
 
“Gilt yields climbed on the news – and so should awareness among individuals with UK assets. The time to protect your wealth is now,” Green noted on Tuesday.
 
In a sharp warning, he responded to today’s ONS data showing public sector borrowing reached £20.7 billion last month – £3.5 billion more than expected and the highest June figure outside of the pandemic era.
 
“This borrowing shock is the flashing red light on the dashboard. The UK is headed toward a fiscal squeeze, and the Chancellor has limited room to manoeuvre. That makes tax rises not just likely – but, in our view, inevitable,” noted Green.
 
The increase in borrowing was driven by higher interest payments on inflation-linked debt and ballooning public spending, which has outpaced gains in tax revenues. 
 
The data raises questions about how the government can stick to its fiscal rules without turning to new or increased taxes.
 
“Markets are already reacting. Gilts dropped and yields jumped, which is a clear signal that investors expect tougher measures ahead. And that usually means taxes – stealth or otherwise – will be deployed to stabilise the books,” said Green.
 
With debt interest payments nearly doubling year-on-year in June and pressure mounting from backbench MPs for wealth and tourist taxes, Nigel Green says the direction of travel is now unambiguous: “The political noise is getting louder. Whether it’s capital gains, pension reliefs, property, or new forms of wealth taxation, something has to give. The Chancellor has ruled out reopening departmental budgets, which narrows the options dramatically.”
 
He warned that investors, business owners, and anyone with UK assets should not wait to react after the Autumn Budget.
 
“By the time tax policy changes are announced, it’s often too late to respond effectively. The smart move is to plan proactively – now. When fiscal gaps this size appear, governments act fast, and retrospectively,” noted Green.
 
With borrowing at £57.8 billion already this financial year and the Office for Budget Responsibility forecasting a potential £30 billion hole in public finances by year-end, the deVere CEO says the government’s fiscal hand is being forced.
 
He advised that those with investment portfolios, property, pensions or inheritances tied to the UK need to assess their exposure and consider future-proofing strategies, adding that despite the political pledge to avoid day-to-day borrowing, the numbers tell a different story. He said the Treasury is borrowing more, not less, and paying more for it, not less.

deVere Group, an independent investment advisor and specialist financial solutions provider, has $14 billion under advisement.