UK Public Finances Remain a Challenge Despite Lower Borrowing

The UK's public finances remain a challenge despite borrowing slightly less than expected in June. According to figures released by the Office for National Statistics (ONS), the government borrowed £16 billion, about £7.9 billion lower than a year earlier.

This is a rare piece of good news for new Prime Minister Andy Burnham and his Chancellor John Healey, but analysts say challenges remain over the UK's public finances.

Total debt is high by historical standards and close to the annual value of the UK economy. The government paid £11.8 billion in debt interest payments in June, which was nearly a third lower than the same point last year.

Public sector net debt currently stands at nearly £3 trillion, equivalent to almost as much as the value of all goods and services produced in the UK in a year. However, under a new measure called public sector net financial liabilities (PSNFL), total debt was £2.7 trillion at the end of June 2026, the equivalent of 84.5% of GDP.