The UK government borrowed less than expected in December, according to official figures, as record tax receipts provided a boost to Chancellor Rachel Reeves. Public sector net borrowing stood at £11.6bn last month, down from £18.7bn in December 2023, the Office for National Statistics (ONS) reported. Economists had forecast borrowing of £13bn.
The improvement was driven by stronger tax revenues, including increases in national insurance contributions introduced last April and higher wage growth. Combined receipts from income tax and NICs rose by £7.7bn year-on-year to £94bn, the highest total for any December on record. This outweighed a £3.2bn rise in public spending to £92.9bn.
Borrowing for the financial year to December reached £140.4bn, down £300m from the same period last year, but still the third-highest since records began in 1993. The ONS also revised down borrowing for previous months by a combined £3.5bn, after an extra £1.9bn in corporation tax was calculated.
National debt stood at 95.5% of GDP in December, a level not seen since the early 1960s. The government spent £9.1bn on debt interest payments in December, equivalent to £1 in every £10 of public spending. Reeves has made reducing borrowing a priority, announcing £26bn in tax rises in her autumn budget to lower debt and fund public services.
The Office for Budget Responsibility projects borrowing will fall to £138bn for the financial year, down from £152.6bn, with the deficit declining to 4.5% of GDP. Chief Secretary to the Treasury James Murray said the government is stabilising the economy and reducing borrowing. A larger surplus is expected in January due to higher self-assessed tax and capital gains tax receipts.
