UK Public Sector Borrowing Unexpectedly Rises in July

UK public sector net borrowing (excluding public sector banks) was £1.8 billion in July 2026, higher than from £1.1 billion in the same month a year earlier and compared with market expectations for no change. Public sector spending increased by £5.6 billion year-on-year to £115.3 billion, as higher inflation pushed up the cost of welfare, debt interest, wages and government procurement. Receipts rose by £4.8 billion to £113.5 billion, mainly due to rising self-assessment tax receipts, which reached £17.1 billion, the highest for any July on record. Borrowing in the financial year to July 2026 totaled £56.7 billion, £6.0 billion, or 9.6%, lower than in the same period a year earlier but £2.3 billion above the OBR’s forecast. This marked the 12th-lowest April-to-July borrowing total since comparable monthly records began in 1993. Public sector net debt stood at 94.1% of GDP, 0.8 percentage points lower than a year earlier but still at levels last seen in the early 1960s.

UK public sector net borrowing (excluding public sector banks) recorded £16.0 billion in June 2026, a third lower than £23.9 billion in the same month last year and below market expectations of £19.8 billion. In the financial year through June 2026, public sector net borrowing stood at £57.6 billion, £3.7 billion lower than in the same period last year but £2.7 billion above the OBR’s March forecast, marking the tenth-highest April-to-June borrowing since comparable records began in 1993. Central government receipts rose to £95.0 billion, up £5.2 billion from a year earlier, supported by strong growth in income-related taxes and Value Added Tax receipts. Meanwhile, central government expenditure eased to £111.4 billion from £112.9 billion, largely reflecting a £5.3 billion decline in debt interest payments to £11.8 billion, although they remained the fourth-highest June on record. Public debt remained close to 95% of GDP, near its highest level since the early 1960s.

UK public sector net borrowing (excluding public sector banks) rose to £23.3 billion in May 2026 from £17.9 billion last year, above market expectations of £18.5 billion. This was the second-highest borrowing for any May on record, behind that of 2020, indicating a tight fiscal situation. Public sector spending increased by £9.1 billion year-on-year to £118.0 billion, driven by rising costs of debt interest payments, public service delivery, investment, and benefits. Central government debt interest costs were the highest ever recorded for the month of May. Public sector receipts rose by £3.7 billion to £94.8 billion, supported by higher tax receipts. Public sector net debt excluding public sector banks was equivalent to 95.1% of GDP at the end of May, up 0.4 ppts from a year ago. Borrowing in the FY to May was £46.3 billion, up £8.9 billion from the same period in 2025 and £7.7 billion more than the OBR’s forecast in March before the full impact of the Middle East war were known.