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GB: Public Sector Finances
| Actual | Previous | Revised | |
| Public Sector Net Borrowing | £11.6B | £11.7B | £10.9B |
| Ex-Public Sector Banks | £11.6B | £11.7B | £10.9B |
Highlights
The UK's public finances in December 2025 show cautious improvement, though fiscal pressures remain elevated. Public sector borrowing fell sharply to £11.6 billion, a 38 percent reduction compared with December 2024, signalling some short-term easing in funding needs. The prior revisions for November showed that public borrowing fell to £10.9 billion against the previous £11.7 billion that as earlier reported for November. However, despite this monthly improvement, December 2025 still ranks as the tenth-highest December borrowing figure since records began in 1993, reflecting the persistence of structural fiscal strain.
Across the financial year to date, borrowing reached £140.4 billion, marginally lower than the same period in 2024, yet remains the third-highest AprilDecember level on record, surpassed only during the pandemic and post-pandemic years. Borrowing as a share of GDP declined slightly to 4.6 percent, indicating modest fiscal consolidation relative to economic output.
The current budget deficit narrowed to £94.9 billion, suggesting improved control over day-to-day government spending. Nevertheless, public sector net debt rose further to 95.5 percent of GDP, approaching levels last observed in the early 1960s. Although broader financial liabilities remain lower at 85.0 percent of GDP, rising debt ratios underline limited fiscal headroom, despite reduced cash requirements from financial markets.
Definition
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.
Description
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.