Reality Check: Searching for Reevess silver lining – Mar 21 2026

Explaining the numbers behind the noise ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌

Hello and welcome to Reality Check: your guide to the economic story of the week. Every Friday, I’ll go beneath the headlines, using the numbers to test what we’re told and uncover what’s really going on.

Searching for Reeves’s silver lining

After a record tax take and surplus in January, normal service has resumed. This morning’s figures from the Office for National Statistics show Britain experienced its second-largest February borrowing splurge since records began in 1993.

Last month the government borrowed some £14.3 billion, which was £2.2 billion more than last February, and the highest figure for the month except during the pandemic. Tom Davies, senior statistician at the ONS, said: ‘While [tax] receipts were up last year, that was outweighed by a rise in spending.’

A large part of that jump in spending was our debt interest payments which, at £13 billion, were the highest ever recorded for February, as this rather striking graph shows:

Some £4.8 billion of that was so-called ‘capital uplift’ on inflation-linked gilts, known as ‘linkers’. Because the Retail Prices Index went up towards the end of last year, so did what we had to pay.

However, there is some strange accounting at play here. The ONS explains: ‘Last month, interest coupon payments due on 30 January 2026 were settled on 2 February 2026 because of the intervening weekend. Consequently, underlying central government debt interest was reduced by £2 billion in January and increased by £2 billion in February.’

Regardless of which month the payments occur, though, that’s still a staggering amount we’re having to pay just to service our debt. It’s this inflation-linked portion that explains why paying the interest on our debt now famously costs around double the defence budget.

If you’re looking for a silver lining, though – and especially if your name is Rachel Reeves – you can find it by looking at the financial year as a whole. Across the first 11 months of the financial year, borrowing (just shy of £126 billion) was down £11.9 billion on the year before. That’s thanks to the surge in tax receipts in January.

The important bit for the Chancellor is that the current budget deficit for the financial year so far is running at £62.1 billion – down more than 21 per cent from a year ago. However, viewing a tax-bonanza-fuelled boost to the public finances as good news is a bit like saying the temporary relief provided by alcohol is a cure for your crippling anxiety.

And let’s not forget that a large contributor to this year’s extra receipts was the widespread fear over prospective taxes on capital gains, as well as the obvious fiscal drag. That’s a trick with diminishing returns. The Chancellor can keep draining our economy with the highest tax burden since the war for only so long before the medicinal effects wear off, leaving nothing but a nervous husk remaining.

Also this week…

There’s an important, if niche, argument brewing in Whitehall. An independent body, the Regulatory Policy Committee, keeps an eye on civil servants and makes sure they produce accurate, evidence-based impact assessments into how much new law and red tape will cost businesses and the economy.

Reports suggest the government wants to scrap it, seeing it as too much of a nuisance. On Monday, Britain’s largest business groups, including the CBI, wrote to the Business Secretary raising concern at the reports. Andrew Griffith, shadow business secretary, said: ‘It’s the Whitehall equivalent of the Chancellor scrapping the OBR. By scrapping it, the government would simply “mark their own homework”, where the true cost of new legislation is forever hidden from the public.’

Coming up next week…

On Wednesday we’ll get February’s inflation figures. The rate of price rises should be around the 3 per cent recorded in January – possibly a little higher. Where things go after that is anyone’s guess. The Bank of England – along with most forecasters – had been expecting inflation to fall sharply once a cut to the energy price cap comes into effect in April. Now they say it could be heading north of 3.5 per cent by the March figures.

The trouble is: even though we won’t see a hike in the energy price cap until July, there is a risk of household expectations of inflation becoming ‘decoupled’ from reality, with increased wage demands embedding inflation. That’s led both Oxford Economics and Deutsche Bank to warn their clients that there will be no further rate cuts this year.

And on this week’s show…

Rachel Reeves, at her second Mais Lecture to the City of London on Tuesday, announced £2.5 billion of investment in quantum computing and artificial intelligence. The Chancellor wants to make the UK the fastest AI adopter in the G7. But, as I argue on this week’s episode, those aims are not compatible with our commitments to net zero and clean power. Have a watch below.

Britain can have AI or Net Zero – but it can’t have both

Michael Simmons

Watch here

Graph of the week

Upcoming debate

Editorial errors, ideological bias and partisan presenters – what has happened to the BBC? Watch Charles Moore, who was fined after refusing to pay his licence fee, and Allison Pearson go up against Michael Gove and Jon Sopel to debate if we should defund – or defend – this once great institution.

Tuesday 24 March, London

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