Government borrowing soars to second-highest level on record
Chancellor Rachel Reeves is facing further pressure over the UK’s public finances after official figures showed higher-than-expected government borrowing last month due to soaring debt interest payments.
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The Office for National Statistics (ONS) said June borrowing rose to £20.7 billion last month – £6.6 billion higher than a year earlier and the second highest June borrowing since records began, only behind that seen in 2020 at the height of the pandemic.
The ONS said interest payable on debt jumped to £16.4 billion due to a large rise in Retail Prices Index (RPI) inflation impacting index-linked government bonds.
June borrowing was higher than the £17.6 billion expected by most economists and the £17.1 billion forecast by Britain’s independent economic forecaster, the Office for Budget Responsibility (OBR).
Borrowing for the first three months of the financial year to date stood at £57.8 billion, £7.5 billion more than the same three-month period in 2024.
Richard Heys, acting chief economist at the ONS, said: “The rising costs of providing public services and a large rise this month in the interest payable on index-linked gilts pushed up overall spending more than the increases in income from taxes and national insurance contributions, causing borrowing to rise in June.”
The ONS said so-called compulsory social contributions, largely made up of national insurance contributions (NICs), jumped by £3.1 billion to £17.5 billion last month – the highest ever recorded for June.
In the first three months of the financial year to date, these compulsory social contributions rose to £48 billion, up £7.5 billion year on year and marking another record.
It followed the move by Rachel Reeves in April to increase NICs for employers, which has seen wage costs soar for firms across the UK as they also faced a rise in the minimum wage in the same month.