22nd Sep 2026 07:12
(Alliance News) - UK public sector borrowing was loftier than expected in August, data on Tuesday showed, on an increase in spending.
The Office for National Statistics said public sector net borrowing amounted to GBP18.27 billion in August, up from GBP15.35 billion a year prior and GBP2.04 billion in July. Borrowing in July is typically lower than other months due to the timing of additional receipts from self-assessed income tax.
The August reading was higher than expected, as the FXStreet-cited consensus had pencilled in borrowing of GBP15.7 billion.
"Borrowing rose by around a fifth compared with August 2025, as spending increased more than government income from taxes and other receipts, partly reflecting the impacts of inflation," the ONS said.
The ONS noted that borrowing in the financial year up to August amounted to GBP77.3 billion, down 2.7% from 12 months earlier but GBP8.1 billion above an Office for Budget Responsibility forecast. The OBR provides forecasts for the UK economy and public finances.
UK Chancellor John Healey will face pressure to raise taxes or cut spending at next month's budget, as soaring borrowing costs because of the Iran war and weaker growth has wiped nearly GBP12 billion off the UK government's fiscal headroom, according to a report on Monday.
The latest KPMG economic outlook estimated that Healey could be left with headroom of about GBP12 billion in the autumn, down from GBP23.6 billion at the time of the spring forecast.
It said rising borrowing costs on the UK's debt after the Middle East conflict has already cut about GBP9 billion off the headroom, with sluggish growth and expected downgrades from the OBR likely to reduce it by about another GBP2 billion.
The budget, the first under Andy Burnham's new government, will be announced on October 28. The next batch of borrowing data is released a week prior.
By Eric Cunha, Alliance News news editor
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