Chancellor Rachel Reeves speaks to the media during a visit to a branch of the Tesco supermarket chain in London, Wednesday Nov. 19, 2025.

As backdrops to a make-or-break Budget go, Friday’s update on how much money the government is currently borrowing was from from ideal for Rachel Reeves.

According to the Office for National Statistics, some £10 billion more has been put on the Treasury’s tab so far this year than was originally forecast.

Coincidentally, this is almost exactly the same as the amount of spare cash – fiscal headroom in the jargon – that Reeves left herself at last year’s Budget.

Put simply, she has run out of money.

As the chancellor prepares to deliver her second Budget on Wednesday, the figures were further evidence of the deep financial hole in which she finds herself.

Nick Ridpath of the Institute for Fiscal Studies said: “This overshoot is driven by a combination of lower-than-expected tax receipts and higher-than-expected borrowing by councils and other bodies outside of central government control.”

The grim data only served to confirm that Reeves faces a hellish economic and political challenge if she is to balance the books while not setting fire to what remains of Labour’s standing in the country.

Despite her well-documented decision to U-turn on plans to shatter Labour’s election manifesto by putting up income tax, it is clear that what she unveils will still contain a lot of pain for voters already suffering a cost of living crisis.

Throw in the never-ending speculation about Reeves’ political future, and that of her boss Keir Starmer, and you can understand why many Labour MPs are preparing to watch the Budget through the gaps between their fingers.

“We need her to succeed because if she flops then we end up in a doom loop about how long she’ll last and how low Keir will........

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