UK BORROWS £18BLN IN AUGUST-Chancellor Healey vowed to stick within the government’s spending limits

The UK government borrowed a higher-than-expected £18.3bn last month, increasing the pressure on the Chancellor of the Exchequer John Healey as he attempts to calm tense bond markets before next month’s budget.

Official figures released by the Office for National Statistics today said public sector net borrowing, which is the difference between government spending and income, was £2.9bn higher last month than in August 2025.

This means that borrowing was £3.5bn higher than expected by the government’s independent forecaster, the Office for Budget Responsibility (OBR), taking the deficit over the financial year so far to £77.3bn , that is £8.1bn above forecast.The £18.3bn borrowed in August was also more than the £15.6bn City analysts had forecast. 

Chancellor Healey vowed to stick within the government’s spending limits, which restrict the amount the Treasury can borrow as a proportion of national income. While the cost of financing UK bonds has eased in the last week, the Treasury remains under pressure to show it can reduce its reliance on heavy borrowing to maintain welfare spending.

The interest rate on 10-year UK bonds has risen by three basis points (bps) to 5.232%, while 30-year bond yields were also 3bps higher at 5.729% in early trading. The consumer prices index rose last month to 3.1% and, while the Bank of England held interest rates at its latest meeting last week, the central bank warned that the cost of borrowing may need to rise in the coming months if inflationary pressures persist.