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The UK government borrowed a higher-than-expected £18.3bn last month, increasing the pressure on John Healey as he attempts to calm jittery bond markets before next month’s budget. Official figures released by Office for National Statistics on Tuesday said public sector net borrowing – the difference between government spending and income – was £2.9bn higher last month than in August 2025. It meant that borrowing was £3.5bn higher than expected by the government’s independent forecaster, the Office for Budget Responsibility (OBR), taking the deficit over the financial year so far to £77.3bn – £8.1bn above forecast.
The £18bn borrowed in August was also more than the £15.6bn City analysts had forecast. Healey, the chancellor, has promised to stick within the government’s spending limits, which restrict the amount the Treasury can borrow as a proportion of national income. The August figures come after the government ran a larger-than-expected £1.8bn deficit in July , when analysts had expected the figure to be zero.
The UK has been among the countries hardest hit by the rise in the interest rate on government bonds amid turmoil financial markets . While the cost of financing UK bonds has eased in the last week, the Treasury remains under pressure to show it can reduce its reliance on heavy borrowing to maintain welfare spending. Martin Beck, the chief economist at the consultancy WPI Strategy, said: “Today’s public finance figures are another unwelcome setback for the government ahead of next month’s budget.” The International Monetary Fund has urged western governments to gain greater control over their public finances to reassure financial markets that they remain safe havens for lenders.
Emma Reynolds, chief secretary to the Treasury, said the government was committed to improving the UK’s economic growth, “but we can only deliver that growth with fiscal discipline”. She added: “At a time when debt interest costs billions of pounds that could otherwise be spent on improving lives, we must always know where the money is coming from to pay for public services. skip past newsletter promotion after newsletter promotion Conservative party Treasury spokesperson, Andrew Griffith, accused Labour of losing control of the public finances. “They are borrowing so much they’ve overshot the OBR forecast by an extra £8bn of debt,” he said.
“It takes a rare fiscal incontinence to both have the highest tax take in history and see borrowing still shoot up.” However, the OBR has said estimates of government borrowing published early in the financial year should be considered provisional and they are likely to be revised.
Source: The Guardian
