UK government borrowing hits record high
In August 2025, the UK government borrowed £18 billion—way above forecasts and £3.5 billion more than last August.
This growing gap between what the government spends and what it earns is putting extra pressure on the Treasury ahead of the autumn budget.
Total borrowing from April to August
From April to August 2025, total borrowing hit £83.8 billion—up by £16.2 billion compared to the same stretch last year.
Higher spending and lower tax income (thanks to stubborn inflation and elevated interest rates) are making it tough for the government to balance its books.
Tax increases on the way?
Chancellor Rachel Reeves is expected to announce tax increases on November 26, aiming to shrink a deficit that could reach £40 billion.
Interest rates remain at 4%
The Bank of England kept its base interest rate at 4% in September, citing ongoing worries about inflation—which was running at 3.8% as of August.
That means higher costs all around, with no rate cut relief for now.