UK borrows more than expected as costs mount
Public sector net borrowing, excluding public sector banks, reached £20.7 billion in June 2025. This was £6.6 billion more than in June 2024 and the second-highest June borrowing since monthly records began in 1993, behind that of June 2020, data published by the Office for National Statistics on Tuesday (22 July) shows.
Public sector net financial liabilities excluding public sector banks were provisionally estimated at 83.9% of GDP at the end of June 2025. This was 2.2 percentage points more than at the end of June 2024, but 12.5 percentage points less than for public sector net debt.
“Borrowing in the month of June was over £6 billion higher than during the same time last year,” said Richard Heys (Acting Chief Economist at the ONS).
“The rising costs of providing public services and a large rise this month in the interest payable on index-linked gilts pushed up overall spending more than the increases in income from taxes and National Insurance contributions, causing borrowing to rise in June,” he said.
The increased borrowing spells more bad news for Chancellor Rachel Reeves, who is already expected to announce several tax hikes in her autumn budget. Reeves’ plans have been derailed by government flip-flopping on spending cuts. There are also fears of a downgrade to official growth projections.
Data published by the Office for National Statistics on 11 July shows monthly real gross domestic product (GDP) is estimated to have fallen by 0.1% in May 2025, following an unrevised fall of 0.3% in April 2025 and growth of 0.4% in March 2025.
Real GDP is estimated to have grown by 0.5% in the three months to May 2025, compared with the three months to February 2025, largely driven by growth in the services sector in this period.
Services grew (+0.1%) in May, but production (-0.9%) and construction (-0.6%) both fell.
