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The UK government’s borrowing significantly undershot expectations in July, reaching just £1.1 billion, offering a welcome reprieve for Chancellor Rachel Reeves as the autumn budget approaches.
This figure, confirmed by the Office for National Statistics, marks the lowest July borrowing total in three years and represents a £2.3 billion reduction compared to the same month last year.
The improved performance was largely attributed to a surge in tax receipts, driven by increased self-assessed income tax and national insurance payments.
Economists had widely predicted a higher July borrowing figure of £2 billion, making the actual outcome a positive surprise.
Despite this monthly improvement, the cumulative borrowing for the first four months of the financial year stands at £60 billion, an increase of £6.7 billion over the corresponding period last year.
Rob Doody, ONS deputy director for public sector finances, said: “Borrowing this July was £2.3 billion down on the same month last year and was the lowest July figure for three years.
“This reflects strong increases in tax and national insurance receipts.
“However, in the first four months of the financial year as a whole, borrowing was over £6 billion higher than in the same period in 2024.”
The figures come after warnings that the Chancellor may need to raise taxes again in the budget in order to plug a black hole of up to £51 billion in the public finances.
Chief secretary to the Treasury Darren Jones said: “We’re investing in our public services and modernising the state, to improve outcomes and reduce costs in the medium term.
“Far too much taxpayer money is spent on interest payments for the longstanding national debt.
“That’s why we’re driving down government borrowing over the course of the parliament – so working people don’t have to foot the bill and we can invest in better schools, hospitals and services for working families.”
