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UK government borrowing rose to highest level in five years in September

KANIKA SINGH RATHORE, 21/10/202521/10/2025

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UK Government Borrowing reached a five-year high in September, putting more pressure on the Chancellor Rachel Reeves On the public wealth of the country.

Public sector net borrowing rose to £20.2 billion this month, £1.6 billion more than in September 2024. National Statistical Office Said.

Rising debt interest costs, an increase in the government’s day-to-day costs from wage increases and inflation, and an increase in inflation-linked benefits helped widen the government’s deficit last month.

This more than compensates for the amount raised through taxes and national insurance.

The figures mean the government spent more on the public sector in September than it took in taxes and other income, requiring it to borrow billions of pounds.

September borrowing was below the amount most economists were expecting at £20.8 billion.

However, this came slightly ahead of the £20.1 billion estimated in March by the UK’s independent fiscal watchdog, the Office for Budget Responsibility (OBR).

The borrowing figure for August was also the highest recorded in that month since the beginning of the Covid pandemic.

Moreover, borrowing reached almost £100 billion between March and September in the current financial year.

The ONS said it was the second-highest amount in 2020 since monthly records began in 1993.

ONS chief economist Grant Fitzner said: “Last month September saw the highest borrowing in five years.

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“Debt interest, public services and the cost of providing benefits have all increased over the last year, more than offset by the increase in receipts from central government taxes and national insurance contributions.

“Similarly, the first six months of the fiscal year saw the highest overall deficit since 2020.”

Chief Secretary of treasure James Murray said: “This Government will never play fast and loose with the public finances.

“We know that when you lose control of public money, working people pay the price.

“So we plan to reduce borrowing and according to IMF (International Monetary Fund) data, we are set to have the largest primary deficit reduction in both the G7 and G20 over the next five years.

“We are cutting waste, improving efficiency and transforming our public services for the future so we can get rid of expensive loan interest, instead putting that money into our NHS, schools and police.

The latest figures come as Rachel Reeves admitted she is considering possible tax rises and spending cuts in her autumn budget statement on November 26.

With weak economic growth, inflation nearly double the 2% target and rising government borrowing costs, she is already trying to plug a black hole in the state’s finances, estimated by some economists at around £50 billion.

Experts said higher-than-expected borrowing by local authorities, particularly to fund support for children with special educational needs, explained most of the increase in September.

Thomas Pugh, chief economist at tax and consulting firm rsmSaid: “Looking ahead to the Budget in the autumn, we are planning a tax increase of around £30bn.

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“We expect some spending cuts to help end the decade with fiscal pressures, an expansion of the base of national insurance contributions and salvo cuts in other taxes to do the bulk of the work.

“The good news is that the Treasury has acknowledged that another budget-induced inflation surge would be counter-productive and is taking steps to avoid it.”

Investec Economics economist Philip Shaw said the latest dataset “doesn’t move the dial on the bigger picture, which is that the Chancellor will have to find fiscal savings in his Budget on November 26”.

“Overall, it is disappointing that the backdrop of better-than-expected growth so far this year is not translating into a more favorable picture for public finances,” he said.

Elliot Jordan-Doch, senior UK economist at Pantheon Macroeconomics, said: “We think today’s figures – the final set of numbers the watchdog will get before finalizing its budget forecasts – have some new implications.

“A more fundamental and bigger problem for the Chancellor will be the decline in productivity growth from the OBR.”

Uk borrowinggovernmenthighestlevelroseSeptemberyears

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