The UK's public finances showed renewed pressure in September 2025, with borrowing rising to £20.2 billion, marking an 8.6 percent increase from September 2024 and the highest September figure since 2020. Cumulatively, borrowing for the financial year to date reached £99.8 billion, up 13.1 percent, emphasizing the government's continued struggle to balance spending and revenue.

The current budget deficit climbed to £13.4 billion in September, pushing the total to £71.8 billion for the first six months17.2 percent higher than the previous yearindicating persistent structural fiscal imbalances. Meanwhile, public sector net debt (excluding banks) rose to 95.3 percent of GDP, a level reminiscent of the early 1960s, reflecting mounting fiscal vulnerability.

Despite this, public sector net financial liabilities stood at a relatively lower 83.8 percent of GDP, showing some cushion against the overall debt burden. The central government's cash requirement also increased sharply by 19.8 percent, signalling intensified borrowing needs to sustain operations.

These latest figures suggest that while the UK economy continues to recover, the government's fiscal position remains strained, driven by rising interest costs, slower revenue growth, and persistent spending pressures, raising concerns about long-term debt sustainability and fiscal prudence.

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.