The UK's public finances in the financial year ending March 2025 reflect deepening fiscal pressures. Borrowing reached £151.9 billion£20.7 billion more than the previous year and overshooting the Office for Budget Responsibility (OBR) forecast by £14.6 billion. The March 2025 monthly figure alone hit £16.4 billion, the third highest for that month since records began in 1993. Relative to GDP, borrowing now stands at 5.3 percent, the eighth highest since the 2009 financial crisis.

The current budget deficit, representing day-to-day public sector spending shortfalls, widened to £74.6 billion, exceeding OBR expectations by £13.9 billion and marking a 0.3 percentage point increase to 2.6 percent of GDP. Debt dynamics remain concerning: public sector net debt excluding banks is now 95.8 percent of GDP 0.2 percentage points than a year earlier, a level last seen in the 1960s, while net financial liabilities hit 83.5 percent of GDP.

Interestingly, the central government's net cash requirement fell in March 2025 to £21.1 billion£7.4 billion less than a year earlieryet the annual figure still overshot forecasts. The latest updates paint a picture of fiscal strain, highlighting the challenge of restoring balance amid rising government costs.

The public sector net borrowing requirement (PSNB) is the difference between the sector's receipts and expenditure and so provides a simple measure of government fiscal policy. In response to the global economic crisis in 2008/09 the UK government introduced a number of measures designed to show the underlying state of public sector finances by omitting temporary distortions caused by financial interventions. It bases its fiscal policy on these measures. To this end, the underlying gauge of government borrowing watched most closely by financial markets is the PSNB-X which takes overall net borrowing (PSNB) but excludes public sector banks.

Changes in public sector finances can be used to determine the thrust of the government's fiscal policy. Generally speaking when the government has a rising deficit (or falling surplus) it is loosening its fiscal stance with a view to boosting economic activity. When its deficit is falling (or surplus rising), fiscal policy is being tightened in order to slow economic growth. However, sometimes changes in government financial positions can be due to factors outside of the government's control and do not signal an explicit shift in policy. This means that great care is needed in interpreting the data.