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GB: Public Sector Finances
| Actual | Previous | Revised | |
| Public Sector Net Borrowing | £14.3B | £30.4B | £-31.9B |
| Ex-Public Sector Banks | £14.3B | £30.4B | £-31.9B |
Highlights
The February 2026 fiscal position reflects a nuanced tension between short-term pressures and medium-term consolidation. Monthly borrowing rose to £14.3 billion, £2.2 billion higher than a year earlier, driven largely by the timing of debt interest payments, suggesting that volatility remains sensitive to financing costs rather than underlying expenditure growth. This reinforces the growing fiscal exposure to interest rate dynamics.
However, the broader fiscal trajectory is more encouraging. Cumulative borrowing for the financial year declined by 8.7 percent to £125.9 billion, while the deficit narrowed to 4.1 percent of GDP, indicating gradual fiscal tightening. More notably, the current budget deficit fell sharply by 21.1 percent, implying improved control over day-to-day spending and a partial shift away from structural imbalance.
Despite these gains, debt sustainability remains a central concern. Public sector net debt at 93.1 percent of GDP, levels last seen in the early 1960s, signals limited fiscal headroom, particularly in a high interest rate environment. While net financial liabilities are lower (82.5 percent of GDP), the gap highlights the importance of asset positions in moderating fiscal risk.
In summary, the UK's fiscal stance reflects cautious consolidation, but remains constrained by legacy debt and sensitivity to borrowing costs.
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.