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The UK government borrowed less than officials forecast in the first month of the fiscal year but risks to the public finances are mounting as a possible bout of stagflation looms.

The budget deficit totaled £18.6 billion ($23.4 billion)in April, government statistics published Tuesday show, just below the £19.1 billion forecast by the Office for Budget Responsibility in March.

The deficit has fallen sharply since the height of the pandemic, when borrowing hit a postwar high, but soaring inflation and the growing risk of recession are casting a shadow over the outlook for the current fiscal year.

The figures for April were affected by a series of tax changes. They include a 1.25 percentage-point increase in National Insurance Contributions, a payroll tax, and a local-authority tax rebate to help households with soaring energy bills.

Government receipts in total rose by almost 17% from a year earlier to £70.2 billion in April, boosted by a strong labor market and the impact of tax increases, the Office for National Statistics said. Revenue from income tax and NICs alone jumped nearly 16% to £31.9 billion. The council tax rebate cost 3 billion pounds.

Spending fell 4.1%, reflecting the phasing out of pandemic-era support programs such as furlough and reduced spending on Covid vaccinations and testing. Net borrowing as a whole was down from £24.2 billion a year earlier.

While debt costs in April were lower than the OBR forecast at £4.4 billion, they are expected to rise sharply over the course of the year. That’s because around a quarter of all government bonds is tied to the retail prices index, which hit a 40-year high of 11.1% in April. Bank of England interest-rate increases to tame inflation add to the cost on the exchequer.

Tax revenue would be hit if the economy falls into recession, a scenario already predicted by some economists, and Chancellor Rishi Sunak is under pressure to increase spending to help people struggling with the cost of living crisis. It would make it harder for him to deliver on his pledge to lower the debt burden and eliminate borrowing for day-to-day spending by the middle of the decade.

“While we are doing what we can to help families deal with rising prices, inflation is also pushing up our spending on debt interest -- which is expected to reach £83 billion this year,” Sunak said in a statement following the figures. “We must take a balanced and responsible approach to support people now, while also not burdening future generations.”

To save money and free up billions of pounds for possible tax cuts and of the next general election, Prime Minister Boris Johnson has ordered his government to slash the UK civil service by around a fifth -- cutting around 90,000 jobs. Public-sector employment surged by around 250,000 during the pandemic as the government took on staff to deliver vaccines and testing.

Borrowing for the fiscal year that ended in March was revised down by £7.2 billion to £144.6 billion That’s still well above the $128 billion that was forecast by the OBR, though the figure is likely to fall further as new spending data come in.

The deficit, which soared to 14.8% of GDP in 2020-21, fell to 6.1% a year later and is forecast by the OBR to decline to 3.9% in 2022-23 assuming the economy keeps growing.