The UK's national debt remained just below the £3 trillion mark last month, according to figures from the Office for National Statistics (ONS). Public sector net debt was provisionally estimated at £2,984.9 billion at the end of July, almost £96 billion more than a year earlier. However, debt as a percentage of the economy stood at 94.1%, 0.8 percentage points lower than a year ago.
Borrowing figures and tax receipts
Borrowing – the difference between what the government spends and receives in taxes – was £1.8 billion in July 2026, which was £700 million more than in July 2025, and £2.3 billion above the Office for Budget Responsibility's forecast. But borrowing in the financial year to date was £56.7 billion, £6 billion lower than the same period a year ago.
July traditionally delivers a boost to the Treasury from self-assessment tax payments, along with January. The ONS said self-assessed income tax receipts totalled a record £17.1 billion last month, £1.7 billion more than in July 2025.
Chancellor's response and expert views
Chancellor 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.”
ONS chief economist Grant Fitzner said: “Public sector borrowing was lower in the financial year to date than in the same period last year, both in total and as a share of the economy. However, it is above the OBR spring forecast. Conversely, borrowing was slightly higher this month than in July last year, with spending growth outpacing higher receipts, including from self-assessed taxes which often feed in more strongly in July.”
The ONS data showed the Treasury collected £18.5 billion VAT last month, £1 billion more than a year ago despite the launch of the government's Great British Summer Savings scheme which has seen VAT temporarily lowered from 20% to 5% at places such as theme parks and kids' meals until September 1. Government borrowing continues to come at a cost, with interest payments swallowing up £7.7 billion last month alone, almost 10% more than a year ago.
Outlook for the autumn Budget
Jake Finney, senior economist at PwC UK, said: "Attention will soon turn to the autumn Budget, when we will get more clarity on the government’s fiscal plans. The Prime Minister may have changed, but the fiscal arithmetic has not. The same difficult trade-offs remain, including the unresolved question of how to pay for higher defence spending. Financial markets have so far been relatively calm about the change in leadership. While there have been some additional spending commitments in recent weeks, these have been small compared with the wider fiscal challenges. However, as we have seen in recent years, markets can become jittery when uncertainty over the public finances rises in the run-up to a Budget."
Danni Hewson, head of financial analysis at AJ Bell, said: "If the new Chancellor needed any reminder of the tight rope he will have to walk when he steps up to the dispatch box at the end of October, today’s borrowing figures delivered that in spades. Despite self-assessment tax receipts hitting a record high for the month, borrowing shot up by a surprising 68.7% in July, compared to the same month last year, as the government continued to spend more than it brings in. July is often the month when the government books a tidy surplus and that’s what economists and the OBR had expected. Despite the increased take from VAT, Corporation Tax, NI contributions and Income Tax, pressures including increased benefit spend and debt interest costs gobbled away all the extra cash and a bit more."
Elliott Christensen, senior economist at think tank the Resolution Foundation, said: "Stronger growth in the first half of the year contributed to strong tax receipts in July. But it has failed to deliver a wider public finances windfall as the economic impact of conflict in the Middle East has taken its toll on borrowing costs. The Chancellor’s margin against his fiscal rules is now razor thin, with the healthy headroom of around £24 billion last spring likely to have fallen below £8 billion. He should use his first Budget to put the public finances on a firmer footing and ensure that any new policy announcements are fully funded."
