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GB: Public Sector Finances
| Actual | Previous | |
| Public Sector Net Borrowing | £16.0B | £23.3B |
| Ex-Public Sector Banks | £16.0B | £23.3B |
Highlights
The UK's June 2026 public finance figures suggest an improving fiscal position in the short term, but they also reveal persistent structural pressures that continue to weigh on the public finances. Public sector borrowing declined by 33.1 percent year-over-year to £16.0 billion, primarily driven by stronger government receipts and a substantial 31.0 percent reduction in inflation-linked debt interest payments. This reflects the easing of inflationary pressures that had previously inflated the cost of servicing index-linked government debt.
Despite this improvement, the broader fiscal outlook remains constrained. Borrowing for the financial year to June reached £57.6 billion, remaining the 10th highest April–June total since 1993 and exceeding the Office for Budget Responsibility's forecast. More importantly, public sector net debt climbed to £2.99 trillion, equivalent to 94.9 percent of GDP—its highest level since the early 1960s—leaving fiscal policy increasingly exposed to future interest rate and economic shocks.
Although lower debt servicing costs have created temporary fiscal breathing space, rising debt stock and financial liabilities indicate that underlying fiscal vulnerabilities remain unresolved. Sustaining fiscal resilience will therefore depend not only on lower inflation but also on stronger economic growth, prudent expenditure management, and policies that expand the tax base without undermining long-term investment and productivity.
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.