UK borrows £18bn in August, putting pressure on Healey before budget
Some economists say it is now ‘inevitable’ that chancellor will need to raise taxes in the budget next month Business live – latest updates 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. Some economists said it was “inevitable” that the chancellor would need to…
The UK government borrowed £18.3 billion in August, exceeding expectations and putting pressure on Chancellor John Healey before his upcoming budget. This borrowing, which is £3.5 billion higher than the government's own forecast and £8.1 billion above current forecasts, has intensified concerns about potential tax increases to meet spending demands.
The Office for National Statistics revealed that public sector net borrowing increased by £2.9 billion in August compared to August 2025, resulting in a total borrowing of £77.3 billion for the year so far, which is £8.1 billion more than forecast. Healey has pledged to adhere to government spending limits, but August's figures have raised doubts about his ability to do so.
Economists predict that an additional tax rise in October may be necessary to fund extra defense spending without further borrowing. The rise in debt interest costs has also been a concern, with government spending on debt interest reaching £50 billion in April, £2 billion more than anticipated. The government's spending on social security benefits and pensions increased by £10 billion, driven by rising inflation.
The Institute for Fiscal Studies highlighted that debt interest could reach over £100 billion annually over the next five years if current interest rates persist. The International Monetary Fund has urged governments to better control their public finances to maintain confidence among investors. Despite the challenges, the government remains committed to fiscal discipline as it seeks to boost economic growth.
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