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GB: Public Sector Finances
| Actual | Previous | Revised | |
| Public Sector Net Borrowing | £24.3B | £12.6B | £11.5B |
| Ex-Public Sector Banks | £24.3B | £12.6B | £11.5B |
Highlights
The UK's April 2026 public finance data reveal a widening short-term fiscal strain despite notable improvements in the broader fiscal position over the last financial year. Public sector borrowing rose sharply to £24.3 billion in April, exceeding both last year's level and the Office for Budget Responsibility's (OBR) forecast, suggesting that underlying expenditure pressures and weaker revenue dynamics continue to challenge fiscal consolidation efforts.
Although borrowing for the financial year ending March 2026 declined to £129.0 billion its lowest share of GDP since 2020 the deterioration at the start of the new fiscal year indicates that fiscal sustainability remains fragile. The increase in the current budget deficit further implies that pressures are not solely investment-related, but increasingly tied to day-to-day government spending obligations.
More structurally, public sector net debt rose to 94.2 percent of GDP, remaining near levels last observed in the early 1960s. This highlights the limited fiscal headroom available to policymakers amid elevated interest costs, weaker growth prospects, and ongoing geopolitical uncertainty.
While lower annual borrowing offers some reassurance regarding medium-term fiscal discipline, April's figures reinforce concerns that the UK's public finances remain highly exposed to economic shocks and persistent spending pressures.
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.