UK Government borrowing rose sharply in August, reaching the highest level for the month in five years, according to the Office for National Statistics (ONS). Borrowing – the gap between public spending and tax income – hit £18bn, well above forecasts and higher than analysts had anticipated.
Although tax and national insurance receipts increased, they were outweighed by higher spending on public services, welfare and debt interest. The ONS said debt interest costs jumped by £1.9bn to £8.4bn, driven partly by inflation. Welfare spending also rose by £1.1bn to £27.3bn, reflecting inflation-linked benefit rises and higher state pension payments.
Between April and August, Government borrowing reached £83.8bn, £16.2bn more than in the same period last year and well above the Office for Budget Responsibility’s March projection of £72.4bn. The figure marks the highest August borrowing since the Covid pandemic.
Rachel Reeves, Chancellor of the Exchequer, now faces mounting pressure ahead of the Budget, with speculation growing that taxes may need to rise to meet her fiscal rules. One analyst noted she faces “tough choices” on tax and spending.
James Murray, Chief Secretary to the Treasury, said the Government was committed to reducing borrowing. He argued that taxpayer money should support national priorities rather than debt interest. He stressed that the focus remained on stability, fiscal discipline and reform.
Separate ONS data offered some brighter news, showing retail sales rose 0.5% in August thanks to good weather, although sales fell slightly over the three months to August.
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