The UK public sector borrowed £1.8 billion in July, £700 million more than a year earlier and £2.3 billion above the official forecast, despite strong self-assessed income tax receipts.
Public sector net borrowing measures the gap between government spending and income from taxes and other receipts. The figures use the Office for National Statistics headline measure, which excludes public sector banks. The ONS said spending grew faster than receipts during the month.
Self-assessed income tax receipts reached £17.1 billion, up £1.7 billion from July 2025. The ONS advised treating the July and August figures together because some payments due in July can arrive late.
Borrowing falls over four months but remains above forecast
Borrowing totalled £56.7 billion between April and July, the first four months of the 2026-27 financial year. That was £6 billion, or 9.6%, less than in the same period last year, but £2.3 billion above the Office for Budget Responsibility’s March forecast.
The distinction matters. The year-to-date position improved compared with last year, but it did not improve as quickly as the fiscal watchdog had expected.
The OBR said central government receipts were £2.8 billion ahead of its forecast profile, helped by corporation tax, PAYE income tax and National Insurance contributions. Central government spending was £5.1 billion higher than forecast.
This means the forecast miss was not caused by weak tax collection. Receipts performed better than expected, but spending exceeded its forecast by a larger amount. The OBR cautioned that early-year spending estimates are highly provisional and particularly likely to be revised.
Public sector net debt stood at £2.98 trillion at the end of July, £95.9 billion more than a year earlier. It was equivalent to 94.1% of gross domestic product, down 0.8 percentage points from July 2025 but still around levels last seen in the early 1960s.
Net debt subtracts liquid financial assets from public-sector liabilities and removes obligations held within the public sector. Expressing it as a share of GDP helps compare the debt with the size of the economy supporting it.
Figures add to a mixed economic picture
The latest borrowing data follow evidence of modest economic growth and continued price pressure. MBN recently reported that the UK economy grew by 0.4% in the second quarter, while consumer price inflation rose to 2.9% in July.
Chancellor John Healey said the government remained committed to meeting its fiscal rules and maintaining a buffer against global uncertainty. The OBR is due to publish its next economic and fiscal forecast alongside the Budget on 28 October.
Henning Diederichs of the Institute of Chartered Accountants in England and Wales said keeping spending under control would be important for maintaining debt-market confidence and limiting the risk of further increases in government borrowing costs.
