UK Government Borrowing Surges to Four-Year High in September
UK public sector borrowing rose to £20.2 billion in September, marking the highest September total since 2020, as government debt continues to expand.
Public Debt Climbs to 95.3% of GDP
According to data released by the Office for National Statistics (ONS) on Tuesday, borrowing increased by £1.6 billion (8.6%) compared with September 2024. This pushed public sector net debt to 95.3% of GDP — a level last seen in the early 1960s.
The current budget deficit, which measures everyday government spending minus revenue, rose to £13.4 billion in September. Over the first six months of the 2025–26 fiscal year, total borrowing reached £99.8 billion, up 13.1% from the same period last year. It also marks the second-highest April-to-September borrowing total since monthly records began in 1993.
Rising Interest Costs Add Pressure
Central government debt interest payments surged to £9.7 billion in September, including £2.7 billion tied to inflation-linked gilts. This increase reflects a 0.4% rise in the Retail Prices Index (RPI) between June and July 2025, putting further pressure on the public finances.
At the end of September, public sector net financial liabilities stood at 83.8% of GDP, up 3 percentage points from a year earlier, signaling a continued strain on the UK’s fiscal position.
Fiscal Targets Under Strain
The UK government faces mounting fiscal challenges as it aims to return the current budget to surplus by March 2030. Achieving this goal will also require reducing public sector net financial liabilities relative to GDP while maintaining spending on key public services.
Economists warn that high borrowing and persistent inflation could complicate the government’s ability to meet its fiscal targets without tightening policy or cutting expenditure.
