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UK borrowing fell in June as inflation-linked debt costs eased

Public sector net borrowing totaled £16.0 billion in June, £7.9 billion less than a year earlier, helped by lower inflation-linked debt interest costs.

Reported · Written up by our desk · Europe

The UK government borrowed less than expected in June, with public sector net borrowing at £16.0 billion, according to data from the Office for National Statistics. That was £7.9 billion lower than June 2025 and came in below City economists' forecasts.

The ONS said the outturn was also about £300 million less than the Office for Budget Responsibility forecast, largely because inflation-linked debt interest costs were lower than expected.

The release arrives as Britain faces rising borrowing costs, with investors watching global bond markets and the new prime minister’s tax and spending plans. The data also follows a government announcement to remove VAT from domestic electricity bills from 1 October to help with the cost of living.

In a statement carried by the Guardian Economics, Chancellor John Healey said the VAT cut would be funded this year by cancelling the digital ID programme, and he described fiscal control as essential to economic stability. The report adds that maintaining Labour’s borrowing and debt constraints has been viewed as important for market confidence as spending pressures build.

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