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The UK government borrowed more than expected in December, underscoring the challenge facing chancellor Rachel Reeves as she tries to restore confidence in her fiscal plans and jump-start growth.

Borrowing – the difference between spending and income in the public sector – was £17.8bn last month, £10.1bn more than in December 2023, data from the Office for National Statistics showed on Wednesday.

This is above the £14.1bn expected by economists polled by Reuters, and compares with the £14.6bn forecast by the Office for Budget Responsibility, the UK fiscal watchdog, in its latest set of projections made in October.

In the first nine months of the financial year, borrowing was £129.9bn, which was £8.9bn more than in the same period last financial year. It was also the second-highest borrowing during the April to December period since monthly records began in January 1993.

Jessica Barnaby, deputy director for public sector finance at the ONS, said that “spending on public services, benefits, interest on debt and capital transfers all increased, while the increase in tax receipts partially offset the reduction in National Insurance contributions, after which the rate will be reduced as early as 2024”.

Reeves sought to reassure investors after the UK’s borrowing costs this month rose to their highest level since the global financial crisis, threatening its ability to meet a self-imposed fiscal rule in which the daily expenses covered by tax receipts.

Following the release of December’s borrowing figures, Darren Jones, chief secretary to the treasury, said: “Economic stability is essential to our number one mission of delivering growth, so our fiscal rules non-negotiable and why we have an iron grip on public finances.”

UK borrowing costs have eased since last week’s figures showed inflation unexpectedly slowed in December, and a global bond sell-off petered out.

But the government remains under pressure to revive the economy, which grew just 0.1 percent in November after mild contractions in September and October.

“As the bond market calmed last week and fears of an emergency mini-budget subsided, the chancellor will be very aware of the erosion of government finances as we head into the OBR’s Economic and Fiscal Forecast due on 26 March,” said Joe Nellis, economic adviser at MHA, the accountancy and advisory firm.