UK government borrowing in the four months to July 2025 was £60 billion — £6.7 billion more than in the same four-month period of 2024 and the third-highest April to July borrowing since monthly records began, after those of 2020 and 2021.
That’s according to the UK’s Office for National Statistics (ONS), which said UK public sector net debt (PSND ex) now stands at more than £2.891 trillion. PSND ex stood at 96.1% of UK GDP at the end of July.
Borrowing for the month of July was £1.1 billion in July 2025 — £2.3 billion less than in July 2024 and the lowest July borrowing for three years.
The ONS said: “The current budget – borrowing to fund day-to-day public sector activities – was in surplus by £3.3 billion in July 2025; this brings the total current budget deficit in the financial year to July 2025 to £42.8 billion, £5.4 billion more than in the same four-month period of 2024.”
The ONS added: “At £7.1 billion in July 2025, the interest payable on central government debt was £0.2 billion more than in July 2024.”
REACTION:
Lindsay James, investment strategist at Quilter: “Today’s public sector finances data highlights just why the rumour mill has kicked into overdrive about which taxes will rise or be implemented at the next Budget.
“The Office for National Statistics has put July’s borrowing figure at £1.1bn, which pleasingly is down from the year below, in what is a usually low month for public sector borrowing.
“However, borrowing in the financial year to July was £60bn, £6.7bn higher than last year and the third-highest April-July borrowing since monthly records began.
“But today’s figures are likely just a respite ahead of a crucial Autumn for the Chancellor and this government. Rachel Reeves has already committed to upping the level of borrowing to help fund a lot of her infrastructure plans.
“But this borrowing is also fuelling levels of spending which simply will not be sustainable over the longer-term. Financial markets, via bond yields, are indicating as much and it is getting to a point where the UK’s fiscal position needs to be re-examined.
“We know Reeves has a black hole to fill, the size of which varies and without economic growth it will need to be plugged by further borrowing or tax rises. The welfare debacle earlier this year highlighted that spending cuts are off the table for now.
“With debt interest already at massive levels, additional borrowing will be difficult, and unless the fiscal rules are changed, tax rises are inevitable. Reeves said the Budget of last year would not need to be repeated, but it has become clear that additional taxes are coming.
“The problem is that the constant testing of tax policies is self-defeating and risks dampening consumer and business confidence. Today’s figures show that the government is going to be forced to become more creative in its tax gathering methods if it doesn’t want to break its manifesto promise of no tax rises on working people or breach the fiscal rules.
“While this situation goes on, economic growth will prove elusive, and this doom loop will become nigh on impossible to get out of.”
Victoria Scholar, Head of Investment, interactive investor: “Public sector net borrowing hit £1.1 billion in July, £2.3 billion less than in July 2024 and the lowest borrowing for this month in three years. Borrowing in July and January are typically lower because of additional receipts from self-assessed income tax. But last month’s figure was even better than expected and a significant year-on-year improvement.
“For the financial year so far between April and July, UK government borrowing hit £60 billion, up 7% year-on-year but in line with official budget estimates.
“July’s improved borrowing data was due to higher tax receipts which provided some support for the public purse. Total government spending on public services, benefits and debt interest all increased. However this was partly offset by a boost from self-assessed income tax payments as well as central government tax and national insurance receipts.
“Nonetheless Chancellor Rachel Reeves is still expected to raise taxes in the Autumn Budget in order to comply with her strict fiscal rules.”
Professor Joe Nellis, economic adviser at MHA, the accountancy and advisory firm: “UK public sector borrowing dropped to £1.1bn in July, the lowest July borrowing for three years, as stronger tax revenues slowed the increase in public borrowing. The uplift in receipts was largely driven by a better-than-expected economic performance in the first half of the year.
“Despite this improvement, borrowing for the financial year to date remains £6.7bn higher than the same period last year. The national debt is hovering close to 100% of GDP, keeping fiscal discipline in sharp focus for investors and lenders. The current trajectory of spending on the ever-enlarging welfare state is unsustainable, and elevated gilt yields continue to push up the cost of servicing the debt (estimated at almost £20bn in June), eating into the Chancellor’s fiscal headroom ahead of a tricky Autumn Budget.
“While July’s figures may offer the Chancellor some limited flexibility, market conditions remain critical. Sticky inflation could upset the financial markets and push up UK gilt yields even further, quickly making the cost of servicing the debt even higher.
“Fiscal stability will continue to be under close scrutiny at the Autumn Budget — there will undoubtedly be tighter control from the Treasury over spending than we’ve seen so far under Reeves’ leadership, but we are almost certainly going to see tax rises.”
Susannah Streeter, head of money and markets, Hargreaves Lansdown: “There will be relief in the corridors of the Treasury that UK government borrowing was lower than expected in July. It came in £1.1bn, down £2.3bn from the same month last year, according to the Office for National Statistics. It’s the lowest July figure for three years.
“While it won’t remove the tight fiscal bind the Chancellor is in, it does ease the pressure a little. Borrowing is now largely on track with forecasts made by the independent Office for Budget Responsibility earlier this year.
“There were stronger than expected tax, and National Insurance receipts, potentially helped by the UK economy returning to growth in July and the effect of frozen tax thresholds taking effect.
“Even though the number of payrolled employees was estimated to have dipped during the month, wage growth remains at a strong 5% and an upswing in discretionary spending during the month may have helped boost the tax take.
“The effects of the higher National Insurance contributions from employers will also have filtered through. It’s a brighter picture for the government but it won’t stop the chatter about tax rises in the Budget given that the growth estimates have dialled back, gilt yields have been rising, and the government will still have a hole to fill in the public finances.”