UK government borrowing reached a five-year high for September, driven by rising debt interest costs and higher welfare payments. The Office for National Statistics (ONS) reported public sector net borrowing of £20.2bn last month, up £1.6bn from September last year.
Increased tax receipts were unable to offset the rise in debt interest payments, which climbed by £3.8bn compared with the same month last year. Higher welfare costs, largely due to inflation, also contributed to the widening deficit.
Total borrowing for the financial year so far stands at £99.8bn, £7.2bn more than the Office for Budget Responsibility (OBR) forecast in March. This is the highest for the April-to-September period outside of the pandemic era in 2020.
The figures add pressure on Chancellor Rachel Reeves ahead of her budget on 26 November, where she is expected to announce significant tax increases. The current budget deficit reached £71.8bn in the first half of 2025-26, exceeding the OBR’s forecast of £58.8bn.
Economists warn that borrowing could overshoot the OBR’s full-year forecast by about £10bn, pushing the deficit close to 5% of GDP. The government has stated it is cutting waste and improving efficiency to reduce debt interest payments.
