The UK’s public sector net borrowing – the difference between public sector spending and income — was £1.8 billion in July 2026, £700 million or 68.7% more than in July 2025, and £2.3 billion above the Office for Budget Responsibility (OBR) forecast.

That’s according to latest figures from the UK’s Office for National Statistics (ONS).

“This month, spending on public services, benefits and other costs was higher than a year earlier,” said the ONS.

The UK’s public sector net debt (PSND) was provisionally estimated at £2.984 trillion at the end of July 2026, £95.9 billion more than a year earlier.

UK government debt at the end of July 2026 was equivalent to 94.1% of GDP, levels last seen in the early 1960s.

UK borrowing in the first four months of the financial year to July 2026 was £56.7 billion — £2.3 billion above the OBR forecast.

In July, the UK government’s debt interest payment alone was £7.7 billion, £700 million more than July 2025.

“Ten-year gilt yields are above 5%, reflecting energy-related inflation concerns, and these will gradually feed through into a larger debt-interest bill as existing debt is refinanced,” said Martin Beck, chief economist at the consultancy WPI Strategy.

“At the same time, the government faces pressure to loosen inherited spending plans, meet unfunded defence commitments and deliver on its own ambitions for housing, infrastructure and public services.”

Thomas Pugh, chief economist at tax and consulting firm RSM, said: “We expect government borrowing to exceed the OBR forecast over the rest of the year as spending continues to rise.

“Higher gilt yields, stubborn inflation, and a government determined to spend more means borrowing is on course to remain ​above 4% of GDP ​this year, instead of ⁠falling to 3.6% as projected.”

The ONS said: “As in previous years, borrowing in July 2026 was lower than in recent months because of SA income tax payments made during the month.

“However, despite higher tax receipts, central government borrowing was £6.4 billion in July 2026, £1.1 billion more than a year earlier …

“SA income tax receipts were provisionally estimated at £17.1 billion in July 2026, £1.7 billion more than in July 2025.

“This was £0.4 billion less than forecast by the Office for Budget Responsibility (OBR) but the highest in any July since monthly records began, in 1999 (not adjusted for inflation).”

UK finance minister John Healey said: “Fiscal discipline is the bedrock of our UK economic stability and national security, which is why we are committed to meeting our fiscal rules, with a buffer against global uncertainties.

“We are cutting the deficit faster than any other G7 economy while giving people a bit of breathing space with cost-of-living pressures and focusing support to get young people into work.”

Pugh of RSM added: “The commitment to sticking to the fiscal rules means further tax rises are inevitable come the autumn Budget.

“The risk is that more borrowing to spend fuels inflation and pushes up gilt yields further, leaving the new Chancellor having to borrow more just to stand still.”