UK borrowing hits £18.3bn ahead of Healey’s Budget
Borrowing in the financial year to August 2026 is £8.1bn above the official government forecast, the ONS said.
UK government borrowing hit £18.3bn in August 2026, the second-highest August figure on record in cash terms, behind only 2020, the Office for National Statistics (ONS) said, ahead of Chancellor John Healey’s first Budget.
That was £2.9bn, or 19.0%, more than in August 2025, and £3.5bn above the corresponding forecast from the Office for Budget Responsibility (OBR), largely because central government borrowed more than had been anticipated.
The rise from a year earlier came as government spending increased more than income from taxes and other receipts, partly reflecting the impacts of inflation.
Borrowing in the financial year to August 2026 totalled £77.3bn, which was £2.2bn, or 2.7%, less than in the same period last year but £8.1bn above the OBR’s forecast.
Central government expenditure over the first five months of the financial year was £7.4bn above the OBR’s forecast, of which net social benefits, including pensions, accounted for £2.4bn and debt interest for £2.0bn.
Central government debt interest payments came to £8.8bn in August 2026, the highest cash figure for the month since monthly records began in 1997.
Even so, that was lower than in each of the first three months of the current financial year.
Of the August total, £2.1bn reflected the rising value of index-linked gilts, largely because of a 0.3% increase in the Retail Prices Index (RPI) between May and June 2026.
Public sector net debt was provisionally estimated at £2,985.5bn at the end of August 2026, £78.5bn more than a year earlier and just below the £3 trillion mark.
As a share of the economy, however, debt stood at 93.8% of gross domestic product (GDP), 1.3 percentage points lower than a year earlier and at levels last seen in the early 1960s.
Receipts were also affected by the government’s Great British Summer Savings scheme.
The scheme cut Value Added Tax (VAT) on certain family-focused activities and children’s meals from 20% to 5% between 25 July and 1 September 2026.
The government has estimated that the scheme will cost around £300m in total.
Under fiscal targets set out in the Autumn Budget 2024, the government must bring the public sector current budget into surplus by the financial year ending March 2030.
It must also reduce net financial liabilities as a share of GDP by the same date.
John Healey, appointed Chancellor of the Exchequer on 20 July 2026, is due to present the first Budget since taking office, on 28 October 2026, when the OBR will publish an updated set of forecasts.