UK government borrowing hits 5-year high as tax hikes loom

Public sector net borrowing excluding public sector banks was £20.2 billion in September 2025, data published by the ONS on Tuesday (21 October) shows.

This was £1.6 billion more than in September 2024 and the highest September borrowing for five years.

Borrowing in the financial year to September 2025 was £99.8 billion; this was £11.5 billion (or 13.1%) more than in the same six-month period of 2024 and the second-highest April to September borrowing since monthly records began in 1993, after that of 2020.

The current budget deficit – borrowing to fund day-to-day public sector activities – was £13.4 billion in September 2025; this brings the total current budget deficit in the financial year to September 2025 to £71.8 billion, which is £10.6 billion (or 17.2%) more than in the same six-month period of 2024.

Public sector net debt excluding public sector banks was provisionally estimated at 95.3% of gross domestic product (GDP) at the end of September 2025; this was a percentage point more than at the end of September 2024 and remains at levels last seen in the early 1960s.

Public sector net financial liabilities excluding public sector banks were provisionally estimated at 83.8% of GDP at the end of September 2025; this was 3 percentage points more than at the end of September 2024, but 11.5 percentage points less than for public sector net debt.

“Last month saw the highest September borrowing for five years. Debt interest, the cost of providing public services and benefits all increased compared with last year, more than offsetting the rise in receipts from central government taxes and National Insurance contributions,” said Grant Fitzner (Chief economist at the ONS).

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

Tax hikes loom

Chancellor Rachel Reeves has confirmed that she is looking at the possible introduction of tax hikes and spending cuts during her November budget.

The Chancellor said the economy was still suffering from the impacts of leaving the EU, austerity policies, and Liz Truss’s mini-budget.

“Already, people thought that the UK economy would be 4% smaller because of Brexit,” she said.

“Now, of course, we are undoing some of that damage by the deal that we did with the EU earlier this year on food and farming, goods moving between us and the continent, on energy and electricity trading, on an ambitious youth mobility scheme.

“But there is no doubting that the impact of Brexit is severe and long-lasting, and that’s why we are trying to do trade deals around the world, US, India, but most importantly with the EU so that our exporters here in Britain have a chance to sell things made here all around the world.”

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