UK government borrowing in the first seven months of its current financial year to October 2025 was £116.8 billion — £9 billion or 8.4% more than in the same seven-month period of 2024 and the second-highest April to October borrowing on record.
The £116.8 billion was £9.9 billion or 9.2% more than the £106.9 billion forecast by the Office for Budget Responsibility in March 2025.
That’s according to the latest figures from the UK’s Office for National Statistics (ONS).
” … interest payable on central government debt increased by £13.3 billion to £67.7 billion, largely because the interest payable on index-linked gilts rises and falls with the Retail Prices Index (RPI) …” said the ONS.
” … net social benefits paid by central government increased by £11.5 billion to £190.4 billion, largely caused by inflation-linked increases in many benefits (including Universal Credit) and earnings-linked increases to state pension payments.”
UK government borrowing was £17.4 billion in October 2025 alone — £1.8 billion (or 9.6%) less than October 2024 but the third-highest October borrowing since monthly records began.
The ONS said: “We have increased our estimate of public sector net debt (PSND ex) at the end of September 2025 by £0.7 billion to £2,916.9 billion, since publishing our Public sector finances, UK: September 2025 bulletin.”
REACTION:
Richard Carter, head of fixed interest research at Quilter Cheviot: “Ahead of next week’s crucial Budget statement, today’s borrowing stats compound the woes for Chancellor Rachel Reeves as she seeks to not only plug gaps in the public finances, but also find extra to rebuild her headroom for future shocks. The government borrowed £17.4bn in October, lower than last year but still the third highest on record for this month since records began in 1993. To date this financial year, borrowing has reached £9bn more than the same period last year, highlighting the extent at which the government has increased borrowing since coming to power last year.
“Markets and investors are craving some sort of fiscal responsibility from the UK government, but with next week expected to bring yet more tax rises and potential unintended consequences, one does begin to question how long this current approach can last. Without a shift in the fiscal rules again, the UK economy is bound between tax rises, spending cuts or a combination of the two. So far this government has preferred to use the lever of tax rises and found its backbenchers have jammed the spending cuts one. Economic growth is subsequently difficult to achieve and shows no sign of taking off again any time soon.
“Gilt yields have been climbing higher once again in recent weeks, and the UK still has a risk premium attached to it compared to peers. Ultimately, today’s borrowing figures suggest Reeves is running out of room, and potentially time, to kick start the economy and get it growing once again. While rate cuts will help, inflation remains sticky and as such the Bank of England may not act as aggressively as the government would like. The ball is in Reeves’ court, but her next move will prove crucial next week.”
Professor Joe Nellis, economic adviser at MHA, the accountancy and advisory firm: “Public sector borrowing came in at £17.43bn for October, painting a challenging picture for the public finances and reinforcing the fiscal squeeze facing the Chancellor ahead of the Budget.
“Despite signs of improving economic momentum in some sectors and a fall in inflation, the UK’s fiscal position remains fragile, shaped by subdued growth, rising welfare pressures, and the ongoing impact of higher interest rates on government debt servicing.
“Today’s data show that borrowing for the year has risen compared with the same month last year, driven by a combination of three key factors: weaker-than-expected tax receipts, increased expenditure linked to inflation-indexed benefits, and another sizeable interest bill on index-linked gilts. While the headline numbers stop short of a fiscal shock, they underline the limited room for manoeuvre the Chancellor will have when setting out next week’s Budget measures.
“This is a sobering reminder of the fiscal reality confronting policymakers. The implications for the Budget are clear. Many government departments already operating under tight budgets are unlikely to see substantial relief, and any additional spending commitments will need to be highly targeted.
“It is imperative that the Chancellor prioritises long-term reforms aimed at boosting productivity and growth rather than relying on short-term stimulus. Without a stronger economic engine, the UK will continue to face difficult trade-offs between funding essential services and stabilising the fiscal position.
“The financial markets will be watching closely. A higher borrowing outturn at this stage increases the risk of further upwards pressure on gilt yields, especially with global rates still elevated. Any sign that the UK’s fiscal strategy lacks credibility would translate quickly into higher funding costs — something the Chancellor will be determined to avoid.
“Looking ahead, the challenge for the Budget is to strike a balance between supporting a still-fragile economy and holding a steady fiscal line. With little margin for error, the Government must use the Budget to restore business confidence, strengthen the growth outlook, and set a credible course for 2026 and beyond.”