UK borrowing rises ahead of Budget as fiscal pressures intensify
Britain's public finances come under fresh pressure in the final stretch before the October 28 Budget, with September borrowing rising more than expected. The increase adds to the challenge for Chancellor John Healey as he seeks to reassure bond markets while funding support for households facing cost-of-living strains.
Highlights
- UK government borrowing in September reached £24.5 billion, £1.9 billion above the Office for Budget Responsibility's forecast, driven by rising debt interest spending.
- Office for National Statistics estimates public sector debt exceeded £3 trillion at end-September 2026, marking the first time at this level despite GDP-relative improvement.
- The chancellor's fiscal buffer has declined to about £12 billion, down from the £23.6 billion OBR March forecast, due to inflation and elevated borrowing costs linked to the Iran war.
September borrowing and debt position
As reported by Financial Times, UK government borrowing rises to £24.5 billion in September, £1.9 billion above the level forecast by the Office for Budget Responsibility, as debt interest spending increases.The figures from the Office for National Statistics provide the last snapshot of the public finances before next week's Budget. The ONS also says debt at the end of September 2026 is provisionally estimated to have exceeded £3 trillion for the first time, although it is lower than a year earlier as a share of the economy.
Budget constraints and market implications
Healey faces tightening fiscal constraints as he prepares his Budget, balancing the need to maintain the confidence of bond markets with pressure to finance measures for households struggling with the cost of living.His room for manoeuvre has been narrowed by the sharp rise in inflation and borrowing costs triggered by the Iran war. Financial Times estimates the chancellor's buffer against the government's self-imposed fiscal rules has likely fallen to about £12 billion, down from the £23.6 billion forecast by the OBR in March.
This is a developing story.
Our earlier coverage looked at Chancellor John Healey’s decision to stay the course on deficit reduction ahead of the October 28 Budget, while still aiming to support growth and ease cost-of-living pressures. We also highlighted the latest ONS data showing the UK economy grew 0.1% in August, underscoring modest resilience even as political pressure around tax and reform options intensified.
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