The Chancellor borrowed more than expected at the start of the new tax year, piling more pressure on the public finances ahead of next month’s spending review.

Data from the Office for National Statistics (ONS) showed estimated net borrowing of £20.2bn in April – higher than the £17.9bn forecast by economists and the fourth highest April total on record.

That was despite a £1.7bn projected boost from employer national insurance contributions – hiked in October’s budget to help get the public finances in order and which kicked-in on 6 April.

The main reasons for the rise in borrowing included increases in public sector pay, along with higher benefits and state pensions, the ONS said.

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The data will do nothing to ease nerves over the state of the nation’s coffers amid renewed concerns Rachel Reeves may be forced to act again, in the autumn budget, to meet her own “non-negotiable” fiscal rules.

They say she must balance day-to-day spending with revenues by 2029-30, while improving public services and targeting accelerated economic growth.

The Chancellor was forced to restore a £10bn buffer at the spring statement in March, led by planned welfare curbs, after the economy flatlined.

A further restoration of headroom may be on the cards in October, given that stronger growth in the first quarter of the year is forecast to prove elusive across the rest of 2025.

The run-up to next month’s spending review – which sets budgets for government departments – has been dominated by a political row over one of her first actions in the role, which saw universal winter fuel payments stopped.

Prime Minister Sir Keir Starmer confirmed on Wednesday that a U-turn, of sorts, is on the cards.

The prospect of a higher bill ahead will do nothing to ease the cost of servicing government debt, with bond market investors continuing to demand a higher premium to hold UK gilts.

Their concerns include not only the forecasts for slowing growth but also persistent inflation.

One good bit of news for Ms Reeves was a downwards revision by the ONS to its government borrowing figure for the last financial year.

The total dropped by almost £4bn to £148.3bn.

The shift was explained by higher tax receipts but the sum still remained about £11bn above the updated forecast by the Office for Budget Responsibility.

Darren Jones, chief secretary to the Treasury, said of the ONS figures: “After years of economic instability crippling the public purse, we have taken the decisions to stabilise our public finances, which has helped deliver four interest rate cuts since August, cutting the cost of borrowing for businesses and working people.

“We’re fixing the NHS, with three million more appointments to bring waiting lists down, rebuilding Britain with our landmark planning reforms and strengthening our borders, delivering on the priorities of the country through our plan for change.”

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There is a growing school of thought that Ms Reeves will need to raise taxes in October if she is to meet her commitments, including her fiscal rules.

Lindsay James, investor strategist at wealth management firm Quilter, said: “The decision to hold off on tax rises in the spring budget increasingly looks like a temporary reprieve.

“As borrowing continues to outstrip forecasts and debt interest costs remain elevated, pressure is building on the chancellor to make tougher choices.”

The M&S website is down – hours after the retailer revealed it’s facing a £300m hit to profits following last month’s ransomware attack.

A holding page told customers that they are currently unable to browse the site, adding: “We’re making some updates and will be back soon.”

Online purchases have been suspended since the incident on 22 April, and it may be a couple of weeks before services are partially restored.

Sky News understands that the maintenance is routine.

M&S recently warned that disruption to its operations could last into July, but chief executive Stuart Machin says the retailer is “on the road to recovery”.

It is widely believed the retailer fell victim to Scattered Spider, a hacking group that has also been linked to similar attacks targeting The Co-op and Harrods.

Last week, M&S also admitted personal data belonging to some of its customers has been stolen – but the company stressed this didn’t include “usable payment or card details”.

Passwords were also not affected, but there are reports that contact details such as names, addresses and phone numbers was taken.

The company’s valuation has plunged by more than £1bn as the fallout deepens.

“This incident is a bump in the road, and we will come out of this in better shape, and continue our plan to reshape M&S for customers, colleagues and shareholders,” Mr Machin told analysts on Wednesday.

The pace of inflation surged last month to an annual rate of 3.5%, its highest level in more than a year, according to official figures which pointed to hikes to essential household bills.

The Office for National Statistics (ONS) said the increase, up from a 2.6% rate in March, was explained by an unusual increase to energy bills during April and steeper rises for other staples such as water.

Households on the energy price cap saw a rare spring rise of 6.4% in April, while council tax bills were widely up by the 5% level.

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The water regulator allowed suppliers to charge customers an extra £10 per month, on average, across England and Wales while broadband, mobile and TV licence costs also rose.

ONS acting director general Grant Fitzner said of the price picture: “Significant increases in household bills caused inflation to climb steeply.

“Gas and electricity bills rose this month compared with sharp falls at the same time last year due to changes to the Ofgem energy price cap.

“Water and sewerage bills also rose strongly this year as did vehicle excise duty, which all pushed the headline rate up to its highest level since the beginning of last year.

“This was partially offset by falling prices for motor fuels and clothing, driven by heavy discounting for children’s garments and women’s footwear.”

The consumer prices index measure of inflation is closely-watched as rising numbers make it difficult for the Bank of England to cut interest rates – raised sharply by the Bank from December 2021 to tackle the infancy of the cost of living crisis.

There have been four cuts since August last year, as easing inflation has allowed.

In advance of the ONS data, financial markets had fully priced in two further interest rate reductions this year, with no change expected at the Bank’s next rate-setting meeting in mid-June.

The inflation numbers also make for tough reading at the Treasury, where Chancellor Rachel Reeves is juggling several challenges.

While the recent economic growth figures have been encouraging, economists widely expect hikes to consumer bills to apply a further choke to consumer spending in the months ahead.

Ms Reeves said: “I am disappointed with these figures because I know cost of living pressures are still weighing down on working people.

“We are a long way from the double digit inflation we saw under the previous administration, but I’m determined that we go further and faster to put more money in people’s pockets.

“That’s why we have increased the minimum wage for millions of working people, frozen fuel duty to protect commuters and struck three trade deals in the past two weeks that will go towards cutting bills.”

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Economists have questioned whether the inflation numbers may have also been pushed higher due to firms passing on costs after the chancellor’s decision to raise employer national insurance contributions and the minimum wage last month.

Shadow chancellor Sir Mel Stride blamed Labour’s “damaging” tax increase for the rise in inflation.

He said: “We left Labour with inflation bang on target, but Labour’s economic mismanagement is pushing up the cost of living for families – on top of the £3,500 hit to households from the chancellor’s damaging jobs tax.

“Families are paying the price for the Labour chancellor’s choices.”