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GB: Public Sector Finances
| Actual | Previous | Revised | |
| Public Sector Net Borrowing | £24.5B | £18.3B | £17.3B |
| Ex-Public Sector Banks | £24.5B | £18.3B | £17.3B |
Highlights
The UK’s public finances faced renewed pressure in September 2026, reflecting the growing tension between fiscal sustainability, inflation and rising debt-servicing costs. Public sector borrowing reached £24.5 billion, increasing by 7.7 percent annually and exceeding the Office for Budget Responsibility’s forecast by £1.9 billion.
More concerningly, debt interest payments surged by 16.6 percent to £10.9 billion, accounting for approximately 44.5 percent of September’s net borrowing. This illustrates how inflation-linked debt obligations can intensify fiscal pressures and constrain expenditure flexibility.
Although cumulative borrowing declined by 4.3 percent to £97.8 billion, it remained £6 billion above projections, suggesting persistent challenges in meeting fiscal targets.
Meanwhile, public debt provisionally exceeded £3 trillion, reaching 94 percent of GDP. Interestingly, the debt-to-GDP ratio declined by 0.7 percentage points despite rising nominal indebtedness, demonstrating the importance of economic growth and inflation in shaping debt dynamics.
Consequently, elevated borrowing costs and persistent fiscal deficits risk narrowing the government’s capacity to finance infrastructure, public services and productivity-enhancing investments. Ultimately, restoring fiscal resilience requires sustained economic growth, credible expenditure management and a careful balance between fiscal consolidation and long-term investment.
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.