UK July Government Borrowing Falls to £1.1bn, Lowest in Three Years

The UK government borrowed £1.1 billion in July 2025, marking the lowest July borrowing in three years and significantly below economists' forecasts, providing a temporary boost to Chancellor Rachel Reeves ahead of the autumn budget. Despite this, borrowing for the current financial year has reached £60 billion, the third-highest since records began, and remains in line with official forecasts underpinning the government's fiscal plans. The reduction in July borrowing was largely driven by increased income tax receipts due to self-assessment deadlines. However, public debt has risen to 96.1% of GDP, raising concerns about long-term fiscal sustainability and potential future tax increases to cover a forecasted £50 billion funding gap. Analysts and the Office for Budget Responsibility warn that the government may need to raise taxes or cut spending to meet fiscal rules and avoid unsettling financial markets, especially given recent policy reversals and lower economic growth expectations. This cautious optimism on borrowing contrasts with warnings about rising debt and the challenges in balancing public finances amid competing policy promises.