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GB: Public Sector Finances
| Actual | Previous | Revised | |
| Public Sector Net Borrowing | £23.3B | £24.3B | £23.0B |
| Ex-Public Sector Banks | £23.3B | £24.3B | £23.0B |
Highlights
The UK's public finances deteriorated further in May 2026, highlighting the growing fiscal pressures facing the government amid elevated borrowing costs and a subdued economic environment. Public sector borrowing reached £23.3 billion, exceeding both last year's level by 30.4 percent and the Office for Budget Responsibility's (OBR) forecast by £5.6 billion. This suggests that fiscal consolidation efforts continue to face significant headwinds.
A key driver of the widening deficit was the sharp increase in debt servicing costs. Central government debt interest payments rose to a record £11.7 billion for May, reflecting the combined impact of high interest rates and the substantial stock of public debt. This underscores the increasing fiscal burden of financing government obligations in a higher-rate environment.
The broader fiscal picture also remains challenging. Borrowing during the financial year to date has reached £46.3 billion, the fifth-highest level on record relative to GDP, while the current budget deficit has significantly exceeded OBR expectations. Meanwhile, public sector net debt has climbed to 95.1 percent of GDP, remaining near levels last experienced in the early 1960s.
In summary, the figures signal a weakening fiscal position characterised by rising borrowing requirements, escalating debt-servicing costs, and limited fiscal space. The data reinforce concerns that maintaining debt sustainability may require difficult trade-offs between public spending, taxation, and economic growth objectives in the months ahead.
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.