UK borrowing hits five-year high in August as Budget pressure grows

Public sector net borrowing in August stood at £18 billion, the Office for National Statistics said, a five-year high for the month and well above analysts’ £12.8 billion consensus. The deficit reflected higher spending on public services, benefits and debt interest even as overall tax and National Insurance receipts rose compared with a year earlier.

Year to date, borrowing totals reached £83.8 billion, up £16.2 billion from the same period in 2024-25 and about £11.4 billion above the Treasury’s forecast from the independent Office for Budget Responsibility. The data underscore ongoing pressure on Chancellor Rachel Reeves and the government as they prepare the Autumn Budget, with economists warning that productivity and growth downgrades could worsen the fiscal gap.

ONS chief economist Grant Fitzner said the August borrowing total was the highest for that month since the pandemic era. He noted that while receipts from taxes and National Insurance were up year over year, the rise in spending on public services, benefits and debt interest outpaced that increase. He added that the year-to-date figure marked the highest for the period since 2020, and that routine annual data updates were part of the month’s release.

Shadow chancellor Mel Stride seized on the figures, arguing that the Conservative opposition remains the only party committed to fiscal restraint and that Labour’s leadership has failed to curtail deficits. He said the government had “lost control of the public finances,” citing rising borrowing costs that he described as a symptom of policy drift as the Budget looms.

Debt service costs, already weighing on public finances, have continued to push up the total burden faced by Reeves and her team. The combination of higher debt interest and planned public spending priorities has intensified scrutiny of the government’s fiscal trajectory ahead of the Budget.

The August data come at a time when analysts warn that downgrades in productivity and growth could widen the fiscal hole. With calls for higher defence spending and ongoing welfare commitments likely to feature in debates ahead of the Budget, observers say the government faces difficult choices about how to balance borrowing, investment and public services in the coming years.