UK public sector borrowing was loftier than expected in August, data on Tuesday showed, on an increase in spending.
The Office for National Statistics said public sector net borrowing amounted to £18.27 billion in August, up from £15.35 billion a year prior and £2.04 billion in July. Borrowing in July is typically lower than other months due to the timing of additional receipts from self-assessed income tax.
The August reading was higher than expected, as the FXStreet-cited consensus had penciled in borrowing of £15.7 billion.
“Borrowing rose by around a fifth compared with August 2025, as spending increased more than government income from taxes and other receipts, partly reflecting the impacts of inflation,” the ONS said.
The ONS noted that borrowing in the financial year up to August amounted to £77.3 billion, down 2.7% from 12 months earlier but £8.1 billion above an Office for Budget Responsibility forecast. The OBR provides forecasts for the UK economy and public finances.
Will Healey Raise Taxes at the Budget?
UK Chancellor John Healey will face pressure to raise taxes or cut spending at next month’s budget, as soaring borrowing costs because of the Iran war and weaker growth has wiped nearly £12 billion off the UK government’s fiscal headroom, according to a report on Monday.
The latest KPMG economic outlook estimated that Healey could be left with headroom of about £12 billion in the autumn, down from £23.6 billion at the time of the spring forecast.
It said rising borrowing costs on the UK’s debt after the Middle East conflict has already cut about £9 billion off the headroom, with sluggish growth and expected downgrades from the OBR likely to reduce it by about another £2 billion.
The budget, the first under Andy Burnham’s new government, will be announced on October 28. The next batch of borrowing data is released a week prior.
