Thanks for joining me. Rachel Reeves borrowed more than expected in March as economists warned weak growth and rising energy costs from the Iran war would continue to pile pressure on public finances.

Rising welfare payments and higher public sector pay meant the government borrowed £12.6bn in March to cover the gap between tax receipts and public spending, according to the Office for National Statistics (ONS).

This exceeded the £10.4bn expected by economists, even as a drop in debt interest payments meant the figure was £1.4bn lower than a year ago and the lowest March borrowing since 2022.

Economists warned the data “may prove a poor guide to what comes next” as the effects of the Iran war take hold.

Martin Beck, chief economist at WPI Strategy, soaring revenues from North Sea oil and gas would be offset by weaker growth and a potential support package to lower household energy bills.

He said: “A sustained rise in energy prices would create a double squeeze on the public finances. 

“True, higher oil and gas prices could boost North Sea revenues, while stronger inflation might lift VAT receipts and income tax revenues through frozen thresholds. 

“However, those gains would likely be outweighed by weaker economic growth and higher spending pressures, including increased welfare costs, rising debt interest payments, and potential support for households and energy-intensive firms.”

The higher than expected borrowing last month came as the Government increased its net social benefits payments by £20.7bn to £327.3bn, largely caused by inflation-linked increases in many benefits like Universal Credit and higher pension payments.

The Treasury borrowed less than the budget watchdog’s forecasts in the last financial year, the ONS said.

Public sector borrowing reached £132bn in 2025-26, which was slightly less than the £132.7bn that had been projected by the Office for Budget Responsibility (OBR). Here is what you need to know.

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4) The accident waiting to happen to Britain’s trillion pound pensions industry | Pension funds should not be gambling on private credit

5) Britain at risk of mobile signal rationing as energy costs soar | Telecoms giants draw up emergency plans to help reduce energy use

What happened overnight

Asian shares retreated from record highs ​as oil prices ‌extended their gains on renewed shipping woes in the Gulf.

European stocks are bracing for a much weaker open, despite Wall Street hitting all-time peaks on Wednesday.

Overnight, the S&P 500 climbed 1pc and the Nasdaq jumped 1.6pc to notch fresh record-closing highs, helped by a strong start to the earnings season.

MSCI’s broadest index of Asia-Pacific shares outside Japan had earlier tracked Wall Street and rallied to a record of 831.56 points, but selling soon kicked ‌in. It was ‌last down 0.5pc.

Japan’s Nikkei vaulted ⁠to a new high for a second day before falling 0.9pc. Markets in Taiwan and South Korea also hit new highs and then turned lower.

China’s blue chips fell 0.8pc and Hong Kong’s Hang Seng index skidded 1.1pc.

Higher oil prices were partly to blame, with Brent crude ⁠up another 1.4pc to more than $103 a barrel, having jumped 3.5pc overnight to cross back above $100.

Iran on Wednesday captured two container ships seeking to exit the Gulf via the Strait of Hormuz, tightening its grip on the crucial waterway, as investors watch if the fragile ceasefire in the Middle East will hold.