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UK borrowing overshoots forecasts in July ahead of October Budget

July borrowing came in at £1.8bn, a £2.3bn swing versus the expected surplus, and welfare spending rose by £2.0bn year over year.

Reported · Written up by our desk · Economy

The UK government borrowed more than expected in July, according to Office for National Statistics figures released as Chancellor John Healey prepares his first Budget.

Borrowing, defined as the gap between what the government spends and what it collects in tax, totaled £1.8bn for the month. Forecasters had expected a £500m surplus, implying the government borrowed £2.3bn more than predicted.

Economists said the overshoot will likely limit fiscal flexibility for measures aimed at easing the cost of living, with little room to increase borrowing in the Budget on 27 October. Healey has said he will maintain “strong fiscal discipline” and is using the prior administration’s fiscal rules that require day-to-day spending to be funded by tax receipts by the end of the decade.

The ONS said borrowing from April to July reached £56.7bn, which is lower than last year but £2.3bn above forecasts from the Office for Budget Responsibility. Economists also pointed to higher welfare spending, including benefits and other payments such as the state pension, which came in £2.0bn higher than in the same period last year, according to BBC Business.

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