UK public sector borrowing reached £18.3bn in August, running £3.5bn above the official forecast and adding another difficult fiscal data point ahead of the government’s October Budget.
Figures from the Office for National Statistics show borrowing — the gap between public sector spending and income — was £2.9bn, or 19%, higher than in August 2025. It was the second-highest August borrowing figure on record in cash terms, exceeded only during 2020.
The year-to-date position is more mixed. Borrowing between April and August totalled £77.3bn, £2.2bn lower than during the equivalent period last year but £8.1bn above the Office for Budget Responsibility’s forecast. The gap between the official fiscal path and the latest outturn has therefore widened even as borrowing has fallen year on year.
Central government borrowing accounted for £13.3bn in August, £1.6bn more than a year earlier. Tax receipts increased, helped by growth in income-related taxes, but expenditure rose more quickly. Self-assessed income tax receipts across July and August totalled £18.6bn, £1.9bn higher than a year earlier.
The figures arrive with the government already facing pressure over the amount of room available against its fiscal rules. Recent analysis of the UK fiscal outlook has highlighted the effect of borrowing costs on the available buffer, while monthly public-finance data continue to show how sensitive the position is to tax receipts, welfare spending, debt interest, and departmental expenditure.
The August release also contains more favourable indicators. Borrowing in the financial year to date was equivalent to 2.5% of gross domestic product, 0.2 percentage points lower than at the same stage last year. On that measure, the April-to-August period was the tenth-lowest since comparable monthly records began in 1993.
Public sector net debt was provisionally estimated at £2,985.5bn at the end of August, £78.5bn higher than a year earlier. As a share of the economy, debt stood at 93.8% of GDP — 1.3 percentage points lower than in August 2025 and 0.8 percentage points below the OBR’s forecast.
The lower ratio reflects nominal GDP growing faster than the stock of public debt rather than a fall in debt in cash terms. The distinction is material because the government still needs to finance annual deficits, refinance maturing borrowing, and meet interest costs even when the debt-to-GDP ratio declines.
Changes in bond-market yields can therefore alter the fiscal position without any change to individual spending programmes. The effect builds as debt is issued or refinanced, while inflation-linked liabilities can introduce another source of volatility into interest expenditure.
The latest numbers are also subject to revision. The ONS increased its previous estimate of borrowing in the financial year to July by £2.3bn, largely because earlier estimates of tax receipts were reduced. Monthly public-finance figures are routinely updated as more complete administrative information becomes available.
That makes the comparison with the OBR forecast particularly important ahead of the Budget. Borrowing is lower than during the equivalent five months of 2025/26, but it has not fallen as quickly as the official forecast assumed.
The government’s eventual room for tax and spending decisions will depend on the OBR’s updated assessment of the economy and public finances, rather than on a single monthly release. Growth, employment, inflation, market interest rates, tax receipts, and departmental spending can all materially alter the calculation.
The August figures nevertheless strengthen the evidence that fiscal headroom remains constrained. A continuing overshoot against the forecast would reduce the capacity to absorb further adverse changes without adjusting tax, spending, or borrowing plans.
The next ONS public sector finances release is due on 21 October, providing another month of data before the Budget. August leaves the government with borrowing running ahead of forecast even as the debt-to-GDP ratio moves in a more favourable direction.
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