U.K. Government Borrowing Falls Again, But Stays Above Target—Update

By Paul Hannon

Borrowing by the U.K. government was a third lower in June than a year earlier, but was nonetheless slightly above target for the fiscal year to date.

The Office for National Statistics Tuesday said the government borrowed 16 billion pounds ($21.49 billion) in the third month of the new fiscal year, down 7.9 billion pounds on the same month in 2025.

For the fiscal year to date, borrowing totaled 57.6 billion pounds, a decline of 3.7 billion pounds compared to the same period last year, but 2.7 billion pounds above projections published by the Office for Budget Responsibility.

The decline in borrowing during June was largely due to a fall in interest payments to 11.8 billion pounds, down 5.3 billion pounds from the same month last year.

The decline in interest costs reflects a drop in inflation over recent months. Compared to its peers, bonds paying an interest rate that is linked to inflation account for a larger share of the U.K. government debt.

The mixed news on borrowing comes as Andy Burnham takes over as prime minister. He named former defense minister John Healey as his treasury chief late Monday.

Investors worry that Burnham's efforts to boost growth will lead to higher borrowing. The new prime minister has promised to present a 10-year plan for the country later this year that would offer "a new political model and a new economic model."

In the fiscal year that ended in early April, the government reduced the gap between spending and revenue to its narrowest since the outbreak of the Covid-19 pandemic, and planned to further cut its budget deficit over coming years.

According to March projections, the OBR expects the government to borrow 115.5 billion pounds in the fiscal year ending April 5, 2027, a drop from 129 billion pounds in the fiscal year that ended on April 5, 2026.

Write to Paul Hannon at paul.hannon@wsj.com

(END) Dow Jones Newswires

July 21, 2026 02:54 ET (06:54 GMT)