In July 2025, the UK recorded its lowest July borrowing in three years at £1.1 billion, reflecting more substantial revenues, particularly from self-assessed income tax, which rose to £15.5 billion. Yet, this improvement is partly seasonal and may shift once August payments are considered. Despite the monthly progress, borrowing for the financial year so far reached £60.0 billion, £6.7 billion higher than last year and still among the highest AprilJuly figures on record, signalling persistent fiscal pressures.

Encouragingly, the current budget showed a £3.3 billion surplus for July, though the year-to-date deficit widened to £42.8 billion. Debt dynamics remain concerning: net debt stood at 96.1 percent of GDP, echoing levels not seen since the 1960s, while net financial liabilities (excluding public sector banks) reached 83.9 percent of GDP.

However, the central government's net cash requirement fell sharply to £6.3 billion, down £22.8 billion from a year earlier, easing immediate funding pressures. In essence, the latest updates show that short-term borrowing relief and stronger tax inflows are offset by structurally high deficits and debt, leaving fiscal consolidation an ongoing challenge.

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.