UK public sector borrowing exceeds forecasts in July

UK public sector net borrowing reached £1.8 billion in July, significantly exceeding forecasts and highlighting a tighter fiscal position for the government as it prepares its first Budget. The figure, released by the Office for National Statistics on August 21, 2026, was £2.3 billion higher than the official forecast from the Office for Budget Responsibility. It also represented a 68.7% increase, or £700 million, compared to July of the previous year.

The unexpected deficit occurred despite a record high for July income tax receipts, which hit £17.1 billion, up £1.7 billion on the year. However, spending growth outpaced this revenue boost. Social benefit payments were £2 billion higher than a year ago, and interest payments on government debt rose by £700 million to £7.7 billion. The ONS noted that while July is typically a strong month for tax receipts due to self-assessment deadlines, some payments may have been delayed into August.

The data places immediate pressure on Chancellor John Healey as he draws up the Budget scheduled for October 28. The borrowing overshoot for the first four months of the financial year, from April to July, reached £56.7 billion. While this is £6...