Source: ONSRelease: Public Sector Finances, UK: August 2026Period: August 2026 / FY to August 2026Released: 22 Sep 2026, 07:00 BSTBy: Damian Pudner
Year-to-date borrowing is down. Spending is still £7.4bn over the OBR forecast.
The state borrowed £18.3bn in August, £2.9bn more than a year earlier and £3.5bn above the OBR forecast. Year-to-date borrowing is £2.2bn lower than last year, but that flatters the picture. The Government is still £8.1bn over the OBR's borrowing profile. Receipts are ahead of forecast. Spending is running further ahead.
August Net Borrowing£18.3bnUp £2.9bn on Aug 2025 (+19.0%); £3.5bn above OBR forecast
FY-to-Date Borrowing£77.3bnDown £2.2bn (-2.7%) on last year; £8.1bn above the OBR's March profile
Net Debt / GDP93.8%Down 1.3pp on Aug 2025 (95.1%); 0.8pp below the OBR forecast
Key Points
August borrowing rose sharply. Public sector net borrowing was £18.3bn, £2.9bn more than in August 2025 and £3.5bn above the OBR's monthly forecast. It was the second-highest August borrowing figure on record, not adjusted for inflation.
The year-to-date improvement is nowhere near what the OBR expected. Borrowing of £77.3bn is £2.2bn below the same period last year but still £8.1bn above the March forecast profile.
The miss is on spending. Central government receipts are £1.1bn above the OBR's year-to-date profile. Expenditure is £7.4bn above it. Of that spending overshoot, £2.4bn comes from net social benefits, including pensions, and £2.0bn from debt interest.
The tax take is still rising strongly. Central government tax receipts are up 6.0% on the year to £347.1bn. Self-assessment receipts for July and August combined reached £18.6bn, £1.9bn higher than last year, although still £0.4bn below the OBR profile.
Debt interest remains punishing. Central government interest payable was £8.8bn in August, the highest August since monthly records began in 1997, not adjusted for inflation. £2.1bn was the RPI-linked capital uplift on index-linked gilts.
The previous numbers have been revised higher again. Borrowing to July has been revised up £2.3bn to £59.0bn. Full-year 2025-26 borrowing now stands at £134.3bn, or 4.4% of GDP, £4.5bn higher than last month's estimate.
The Numbers
Source: ONS, Public Sector Finances, UK: August 2026, Table 5.
Subsector Breakdown — August 2026 vs August 2025
Subsector
Aug 2026 (£bn)
Aug 2025 (£bn)
Change
Direction
Central government
13.3
11.7
+1.6
▲ Borrowing higher
Local government
4.5
3.0
+1.5
▲ Borrowing higher
Public corporations
0.5
0.7
-0.2
▼ Borrowing lower
Public sector net borrowing
18.3
15.4
+2.9
▲ Borrowing higher
Source: ONS, Public Sector Finances, UK: August 2026, Table 1.
Commentary
August was bad. The Government borrowed £18.3bn, almost a fifth more than a year ago and £3.5bn more than the OBR expected. Debt interest reached a record for the month and previous borrowing estimates were revised higher.
The year-to-date comparison with 2025 looks better, but it is the wrong benchmark. Borrowing is £2.2bn lower than last year because it was supposed to fall. Against the OBR forecast, it is £8.1bn too high.
Tax revenue is holding up. Central government receipts are £1.1bn ahead of the OBR profile. Spending is £7.4bn ahead. Net social benefits, including pensions, account for £2.4bn of that overshoot and debt interest another £2.0bn.
The year-on-year numbers tell the same story. Central government tax receipts have risen 6.0% to £347.1bn. Total expenditure has risen £25.6bn to £546.3bn. Net social benefits alone are up £9.7bn, or 7.2%, while spending on goods and services has risen another £7.1bn.
The state is taking substantially more money in and still spending more than planned.
Debt interest makes matters worse. August's £8.8bn bill was the highest for the month since records began in 1997, not adjusted for inflation. Of that, £2.1bn was the capital uplift on index-linked gilts, largely reflecting the RPI increase between May and June. Britain's unusually large stock of index-linked debt means inflation feeds through unusually quickly into the public finances.
Nor can debt interest explain the whole overshoot. Benefits are above forecast, other spending is above forecast and receipts are ahead of it.
The revisions offer little comfort. Borrowing through July has been raised by £2.3bn to £59.0bn, while the estimate for borrowing across 2025-26 has risen to £134.3bn. September revisions are often larger because the ONS incorporates annual data updates and methodological changes, so they are not fresh borrowing. But the numbers have moved in the wrong direction.
Why It Matters
GBTT View
The figures leave little room for argument. Receipts are £1.1bn ahead of the OBR forecast. Spending is £7.4bn ahead. Borrowing is £8.1bn higher than planned.
These numbers show a spending overshoot, with revenue ahead of plan.
That matters five weeks before the Budget. The temptation in Whitehall will be to reach once again for higher taxes. But the tax base is already producing more than the OBR expected. The failure is that government is spending still more.
Persistent borrowing also means persistent gilt supply. Investors have to absorb that debt, and at £2.986 trillion even modest increases in the Government's financing cost become expensive very quickly.
None of this changes the immediate monetary-policy call. Fiscal borrowing is not an MPC target, and GBTT's view remains that the next move in Bank Rate is down. The problem exposed by today's release sits at the Treasury: five months into the financial year, spending is already £7.4bn above the OBR profile.
What To Watch
Households
The tax take is ahead of forecast. That matters ahead of the Budget because the fiscal deterioration cannot credibly be presented as a revenue problem.
The Treasury
The key Budget question is spending. Central government expenditure is already £7.4bn above the OBR profile after five months. The October forecast will show whether the OBR now judges that overshoot to be temporary or builds some of it into its full-year numbers.
Gilt Markets
Watch the revised borrowing forecast and the DMO remit. If the OBR raises its estimate of full-year borrowing, the Treasury may need to finance more of it in the gilt market. The maturity mix will matter as much as the headline total.
Next release: Public Sector Finances, UK: September 2026, 21 October 2026.
August was bad. The Government borrowed £18.3bn, almost a fifth more than a year ago and £3.5bn more than the OBR expected. Debt interest reached a record for the month and previous borrowing estimates were revised higher.
The year-to-date comparison with 2025 looks better, but it is the wrong benchmark. Borrowing is £2.2bn lower than last year because it was supposed to fall. Against the OBR forecast, it is £8.1bn too high.
Tax revenue is holding up. Central government receipts are £1.1bn ahead of the OBR profile. Spending is £7.4bn ahead. Net social benefits, including pensions, account for £2.4bn of that overshoot and debt interest another £2.0bn.
The year-on-year numbers tell the same story. Central government tax receipts have risen 6.0% to £347.1bn. Total expenditure has risen £25.6bn to £546.3bn. Net social benefits alone are up £9.7bn, or 7.2%, while spending on goods and services has risen another £7.1bn.
The state is taking substantially more money in and still spending more than planned.
Debt interest makes matters worse. August's £8.8bn bill was the highest for the month since records began in 1997, not adjusted for inflation. Of that, £2.1bn was the capital uplift on index-linked gilts, largely reflecting the RPI increase between May and June. Britain's unusually large stock of index-linked debt means inflation feeds through unusually quickly into the public finances.
Nor can debt interest explain the whole overshoot. Benefits are above forecast, other spending is above forecast and receipts are ahead of it.
The revisions offer little comfort. Borrowing through July has been raised by £2.3bn to £59.0bn, while the estimate for borrowing across 2025-26 has risen to £134.3bn. September revisions are often larger because the ONS incorporates annual data updates and methodological changes, so they are not fresh borrowing. But the numbers have moved in the wrong direction.