The ONS said that Government borrowing climbed to a five-year September high as rising debt-interest and welfare bills outweighed stronger tax receipts. Public sector net borrowing, the gap between Government spending and income, reached £20.2 billion in September, £1.6bn more than a year earlier and the highest September figure since 2020.
So far this financial year, borrowing totals £99.8bn. That is £7.2bn above the Office for Budget Responsibility’s March forecast and, outside the pandemic, the largest April–September sum on record. A revision trimmed cumulative borrowing since April by £4.2bn, but the current budget deficit still hit £71.8bn in the first half of 2025/26, versus an OBR forecast of £58.8bn.
The rise in employer National Insurance contributions introduced in April helped receipts, adding £3.2bn compared with last September. Yet spending rose by more than £10bn, including a £3.8bn jump in debt-interest costs.
Consumers have kept a tighter grip on their wallets this year, with spending flat and the savings rate higher. Some economists think uncertainty ahead of the Budget encourages households to hold back, amid talk of tax rises to repair the public finances.
Government borrowing costs on global markets have eased, reducing the cost of new debt. Even so, the interest bill remains high and annual borrowing is on course to exceed £100bn, close to a tenth of total spending, pressuring Whitehall budgets. The economy grew by 0.1% in August and 0.3% over the three months to August after a downgrade to July’s figures.
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