Published: Friday, September 19, 2025 · 6:30 AM | Updated: Friday, September 19, 2025 · 6:30 AM
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🗝️ Key Points
- UK government borrowing rose by more than expected in August, adding to pressure on chancellor Rachel Reeves ahead of the autumn budget in November.
- Public sector net borrowing rose to £18bn in August figures from the Office for National Statistics (ONS), published on Friday showed.
- This was £3.5bn more than in August 2024 and also higher than the £12.5bn forecast by the Office for Budget Responsibility (OBR) in March and consensus expectations of £12.8bn.
UK government borrowing rose by more than expected in August, adding to pressure on chancellor Rachel Reeves ahead of the autumn budget in November.
Public sector net borrowing rose to £18bn in August figures from the Office for National Statistics (ONS), published on Friday showed. This was £3.5bn more than in August 2024 and also higher than the £12.5bn forecast by the Office for Budget Responsibility (OBR) in March and consensus expectations of £12.8bn.
Grant Fitzner, chief economist for the ONS, said: “Last month’s borrowing was the highest August total since the pandemic. Although overall tax and national insurance receipts were noticeably up on last year, these increases were outstripped by higher spending public services, benefits and debt interest. Total borrowing for the financial year to date was also the highest since 2020.”
Government borrowing for the financial year to August came in at £83.8bn, which was £16.2bn more than in the same five-month period of 2024. This was also the second-highest April to August borrowing since monthly records began in 1993, after that of 2020.
Central government receipts were £84.3bn in August, which was £4.3bn more than the same month last year. Tax receipts increased by £1.6bn to £62.2bn, comprising of increases of £1bn in income tax receipts, £200m in value added tax (VAT) and £100m in corporation tax. An increase in employer NI contributions helped a £2.6bn rise in compulsory social contributions, bringing that total to £16.4bn.
However, provisional estimates showed that government spending came in at £89.1bn in August, which was £7.8bn more than the same month last year.
Read more: Bank of England slows quantitative tightening in boost for Rachel Reeves
The latest borrowing figures left the UK’s net debt at 96.4% of gross domestic product (GDP) at the end of August, which was 0.5 percentage points more than at the end of August 2024 and remains at levels last seen in the early 1960s.
James Murray, chief secretary to the Treasury, said: “This government has a plan to bring down borrowing because taxpayer money should be spent on the country’s priorities, not on debt interest.
“Our focus is on economic stability, fiscal responsibility, ripping up needless red tape, tearing out waste from our public services, driving forward reforms, and putting more money in working people’s pockets.”
The data comes a day after the Bank of England announced that it was keeping interest rates on hold at 4%.
The central bank also announced that it will reduce its quantitative tightening bond-selling programme from £100bn to £70bn, with a broad landing zone of £65-£75bn. The move potentially offers some relief for Reeves ahead of her November budget amid concerns the bank was pushing up borrowing costs by smothering the bond market with UK debt.
Paul Dales, chief UK economist at Capital Economics, said: “Today’s releases highlight the deteriorating nature of the public finances even though the economy hasn’t been terribly weak.
“We think this will contribute to the chancellor having to raise around £28bn in the Budget on 26th November, mostly through higher taxes.”
Lindsay James, investment strategist at Quilter, said: “These figures are staggering and are not showing an economy that is in rude health.”
“Room is very quickly disappearing and Labour have backed themselves into a corner by committing not to raise any of the main revenue generators – specifically income tax, VAT and national insurance,” she said.
“Today’s figures show that the government risks getting itself stuck in a doom loop of constant tax rises on specific sectors or demographics, waiting for the economic tides to turn. The problem we have is they may not turn quickly enough before more drastic measures are required.”
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