UK borrows £18bn in August, putting pressure on Healey before budget

Higher-than-expected figure will make chancellor’s aim of calming jittery bond markets more difficult

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

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

It meant 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 – £8.1bn above forecast.

The £18.3bn borrowed in August was also more than the £15.6bn City analysts had forecast.

Healey, the chancellor, has promised to stick within the government’s spending limits, which restrict the amount the Treasury can borrow as a proportion of national income.

The August figures come after the government ran a larger-than-expected £1.8bn deficit in July , when analysts had expected the figure to be zero.

The UK has been among the countries hardest hit by the rise in the interest rate on government bonds amid turmoil financial markets .

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.

On Tuesday, the yield – or interest rate – on 10-year UK bonds rose three basis points (bps) to 5.232%, while 30-year bond yields were also 3bps higher at 5.729% in early trading.

Chris Beauchamp, the chief market analyst at IG, said: “The PM and chancellor will be feeling quite claustrophobic today as the walls close in around them. Borrowing costs keep climbing, while borrowing itself is outpacing the teeny rise in tax receipts.”

The Institute for Fiscal Studies, a thinktank, said that since April, the government had spent £50bn on debt interest, £2bn more than forecast by the OBR in March.

“On those forecasts – made before the most recent hikes in government interest rates – debt interest was set to be more than £100bn every year over the next five years,” said Nick Ridpath, an IFS research economist.

Central government spending on social security benefits and pensions climbed by almost £10bn more than in the same period last year – from £135.3bn to £145bn – mostly in response to rising inflation.