Economists said the figures added to the likelihood of Healey delivering a cautious set of spending, tax and borrowing plans on October 28
International News via Reuters:
Britain’s government borrowed more than expected again in September and public debt surpassed £3 trillion ($4.01 trillion), according to official data that underscored finance minister John Healey’s challenge in his first budget next week.
Economists said the figures added to the likelihood of Healey delivering a cautious set of spending, tax and borrowing plans on October 28.
Borrowing hit £24.52 billion last month, up from £22.76 billion in the same month last year, as spending on debt interest rose. It was also higher than a median forecast of £23.85 billion in a Reuters poll of economists.
Over the first six months of the 2026/27 fiscal year, the deficit stood at £97.8 billion, down by £4.4 billion from a year earlier but £6 billion above the forecast made by the Office for Budget Responsibility, which was made before the Iran war began.
Healey is expected to raise taxes on banks among other measures next week to stay on track to meet his fiscal rules.
Separate data published by the Office for National Statistics on Wednesday showed inflation rose by more than expected in September, which is likely to add to calls for more support for poorer households in his budget.
But analysts at Capital Economics said the higher-than-expected borrowing in recent months “reinforces our view that the chancellor will deliver a cautious budget on 28th October that has little net impact on the economy and leaves the toughest fiscal choices for next year.”
Healey’s margin for error to stay on course to meet his main budget target is expected to have narrowed sharply in large part due to the rise in borrowing costs for government debt around the world since the start of the conflict in the Gulf.
UK government debt interest costs – which are pushed up when inflation rises – jumped by almost 17% in September to almost £11 billion and were up by nearly 4% over the April-to-September period at £60.8 billion pounds.
Overall government spending was up by 7% in September when tax receipts rose by 5.2%, the ONS said. But over the first six months of the tax year, spending grew by slightly less than tax income.
Healey’s main target is to balance day-to-day spending with tax revenue by the 2029/30 tax year.
The ONS said the current budget was bigger in September than in the same month last year. Over the first six months of the tax year it stood at £64 billion, down by more than 8%.
Public sector debt was estimated to have exceeded £3 trillion for the first time. However, as a proportion of the economy, debt was lower than a year earlier, the ONS said.
($1 = 0.7481 pounds)
Writing by William Schomberg; Editing by Paul Sandle and Kate Mayberry
