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Chancellor Rachel Reeves will likely need to announce billions in tax hikes in the upcoming autumn budget, economists have warned, as UK government borrowing has continued to surge.

Borrowing – the difference between public spending and tax income – hit £20.2bn in September, according to data released by the Office for National Statistics (ONS) on Tuesday. That was up from £1.6bn for the same month last year and was the highest level of borrowing for September in five years.

September's public sector net borrowing figure was also £100m higher than the £20.1bn forecast for the month in March by the Office for Budget Responsibility (OBR).

This meant that borrowing for the financial year to September totalled £99.8bn, which was 13.1% higher than the same six-month period last year and was £7.2bn higher than the OBR's forecast.

Ruth Gregory, deputy chief UK economist at Capital Economics, said that September's figures "highlight the poor performance of the public finances even though the economy hasn’t been terribly weak".

Gregory explained that the overshoot on borrowing wasn't down to higher central government spending. Instead, she said that a slow growth of tax receipts has been a key factor.

"This is surprising given the economy hasn’t been terribly weak and perhaps suggests compositional effects are at play, such as the rise in food inflation prompting more spending on zero-VAT rated food items," she said.

"Of course, it is not borrowing in 2025/26 that matters, but what the OBR forecasts the current budget to be in 2029/30, which is when the chancellor’s fiscal mandate bites," Gregory added. "We think it will forecast a deficit of about £17bn, meaning the chancellor will have to raise £27bn, mostly via higher taxes if she wishes to maintain her buffer against her main fiscal rule."

One of Reeves' fiscal rules is to not borrow to fund day-to-day public spending by the end of this parliament, while the other is to get government debt falling as a share of national income by that time.

Meanwhile, John Wyn-Evans, head of market analysis at Rathbones, said that the latest borrowing figures "continue to show strain on the country's finances".

"When we factor in the probable downgrade to long-term growth estimates from the OBR which will inform the chancellor Rachel Reeves's budget decision-making, it looks as though taxes will need to rise somewhere in the order of £25bn or more," he said.

"Much as many would like that number to be lowered by spending cuts, the mood within the Labour party does not appear to support much hope on that front."

Similarly, Berenberg senior UK economist Andrew Wishart reportedly also said that Reeves will need to announce around £25bn of tax rises and/or spending cuts in next month's budget.

"Higher spending and borrowing than anticipated this year will add to several other factors pushing up the OBR’s borrowing forecast for 2029-30, the fiscal year by which the government has pledged to fund current spending (i.e. excluding investment) entirely with tax revenue," he said, according to the Guardian.

"Getting back on track to meet this target will likely require about £25bn of tax hikes and/or spending cuts in the 26 November autumn budget with another £10bn necessary to build a reserve for unexpected shortfalls, similar to the £10bn margin that was included in the March 2025 budget."

As the budget draws closer, speculation has been ramping up as to what policy changes Reeves could announce to shore up the UK's public finances. One question has been whether the Labour party would be forced to break its election pledge of not raising taxes on "working people", promising not to increase the rates of income tax, national insurance or value-added tax (VAT).

Last week, the Institute for Fiscal Studies (IFS) said that it estimated that the chancellor sees a downgrade of around £22bn to the government borrowing outlook for 2029/30.

"This is the size of fiscal adjustment that would be required to restore the £10bn of headroom against her borrowing rule that Rachel Reeves chose in the spring," the IFS said.

The institute said that a "sizeable fiscal consolidation" would be required for Reeves to meet her fiscal rules.