Britain Borrowed 18.3 Billion Pounds in August, 3.5 Billion More Than Forecast
Public sector net borrowing in the United Kingdom was 18.3 billion pounds in August, 2.9 billion more than a year earlier and 3.5 billion above the Office for Budget Responsibility forecast, the Office for National Statistics reported on Tuesday. It was the second highest August on record in cash terms, behind 2020, and leaves borrowing in the financial year to August 8.1 billion pounds above the forecast profile.
Spending outran a solid month for receipts
Central government receipts rose 3.8 percent on the year to 89.8 billion pounds in August, with income related taxes up 6.6 percent and corporation tax up 4.7 percent, while total central government spending rose 5.0 percent to 103.1 billion pounds. Net social benefits rose 6.9 percent and spending on goods and services 5.7 percent. Debt interest payable was 8.8 billion pounds, the highest August figure in cash terms since monthly records began in 1997, of which 2.1 billion was the capital uplift on index linked gilts following a 0.3 percent rise in the retail prices index between May and June.
| Measure | Latest | Year earlier or forecast |
|---|---|---|
| Net borrowing, August | 18.3bn pounds | 15.4bn a year earlier, 14.8bn forecast |
| Net borrowing, year to August | 77.3bn pounds | 79.5bn a year earlier, 69.2bn forecast |
| Current budget deficit, year to August | 51.9bn pounds | 54.8bn a year earlier |
| Net debt | 2,985.5bn pounds, 93.8% of output | 78.5bn higher than a year earlier |
| Net financial liabilities | 2,620.4bn pounds, 82.3% of output | 108.7bn higher than a year earlier |
| Central government net cash requirement | 10.0bn pounds | 11.1bn a year earlier |
Office for National Statistics, public sector finances for August 2026, released 22 September 2026. Forecast comparisons are against the Office for Budget Responsibility outlook of 3 March 2026 and its monthly profiles published in April 2026.
The debt ratio is falling even as the stock rises
Net debt stood at 2,985.5 billion pounds at the end of August, 78.5 billion more than a year earlier, but at 93.8 percent of output it was 1.3 points lower than a year earlier and 0.8 points below the forecast, because nominal output grew faster than the debt stock. Net financial liabilities were 82.3 percent of output, 0.2 points higher than a year earlier. Borrowing in the year to August was 2.5 percent of output, the tenth lowest April to August period since comparable monthly records began in 1993. The statistics office also revised its estimate of borrowing in the year to July up by 2.3 billion pounds to 59.0 billion, mostly on a 1.4 billion reduction in estimated tax receipts.
Why it matters: the slippage is on the spending side. Central government expenditure in the first five months of the year was 7.4 billion pounds above the forecast profile, of which net social benefits accounted for 2.4 billion and debt interest for 2.0 billion, so those two lines explain about three fifths of the overshoot, on our calculation. That is the arithmetic the Budget on 28 October has to answer, and it is why gilt supply matters to reserve managers well beyond Britain.
Outlook: the Office for Budget Responsibility publishes new forecasts with the Budget on 28 October, and the next borrowing figures come on 21 October. Current receipts in the year to August were 460.7 billion pounds, 1.1 billion above the forecast, while total central government expenditure was 546.3 billion pounds, 7.4 billion above it, so the receipts side is running close to plan while spending is not.
Sources: Office for National Statistics, Office for Budget Responsibility.
