UK borrowing hits £18.3bn in August, squeezing Healey ahead of October budget

The UK borrowed £18.3 billion in August, overshooting forecasts and underlining the fiscal squeeze facing the chancellor ahead of his maiden budget next month.

The figure, published by the Office for National Statistics on Tuesday, was £2.9 billion more than in August 2025 and came in above both City estimates of £15.6 billion and the Office for Budget Responsibility’s projection of £14.8 billion, The Times reported.

Borrowing was driven higher by a jump in debt interest payments. The UK paid £8.8 billion servicing its debts — the highest August figure since equivalent records began in 1997 — after gilt yields rose on worries about climbing inflation and an escalation of the US-Iran war. Total outstanding debt was stable at 93.8 per cent of GDP, the ONS said.

The overshoot piles pressure on Chancellor John Healey, who is likely to have lost at least £12 billion of his £23.6 billion of fiscal headroom since the US-Iran war broke out. Borrowing in the financial year to date has reached £77.3 billion — £8.1 billion more than the OBR predicted in March, though £2.2 billion lower than the same period last year, the Wall Street Journal reported.

Prime Minister Andy Burnham has admitted the budget, due on 28 October, will be “challenging”, with economists saying the chancellor may need to find as much as £15 billion, possibly through tax rises. September’s borrowing figures are released on 21 October.

Sources

• The Times — UK borrowing jumps as debt costs eat into chancellor’s headroom
• The Sun — UK borrowing soars to more than expected in fresh blow ahead of Budget
• The Edge Singapore — UK borrowing overshoots in fresh budget setback for Healey
• Wall Street Journal — UK government borrowing rose in August as budget looms
• UKPulse — UK government borrowing reaches £18.3bn in August, exceeding forecasts