Public sector finances bulletin + reactions

Public Sector Finances: September 2025

Public Sector Finances, Appendix A: September 2025

Public Sector Finances, Appendix M: September 2025

Public Sector Finances, Appendix N: September 2025

Details

The public sector finances statistical bulletin is published jointly by the Office for National Statistics (ONS) and HM Treasury on a monthly basis and provides the latest available estimates for key public sector finance statistics, such as public sector net borrowing, public sector net debt and public sector current budget deficit/surplus.

The bulletin is structured with the latest headline figures, revisions and information on recent events and/or methodological changes which impact on the statistics, located at the front of the bulletin.

Following this there is some contextual information for users and then more detailed information on each of the key aggregates. Historic data on public sector net debt and public sector net borrowing have been included to put the latest figures in context. More detailed notes on the publication are located towards the end of the bulletin.

HM Treasury is no longer producing the public sector finances databank. For information on the key fiscal aggregates:

Go to the OBR for outturn and projected numbers for the key fiscal aggregates in financial years.

Go to the ONS for outturn data of the key fiscal aggregates in quarters, financial years and on a monthly basis.

Go to the ONS for a breakdown on receipts and expenditure.

Chief Secretary to the Treasury 

Chief Secretary to the Treasury James Murray said:   

“Currently we spend £1 in every £10 of taxpayer money on the interest of our national debt. That money should be going to our schools, hospitals, police and armed forces. That is why we are set to deliver the largest primary deficit reduction in both the G7 and G20 over the next five years - to get borrowing costs down.

“At the Budget next week, the Chancellor will set out how we will take the fair choices to deliver on the public's priorities to cut NHS waiting lists, cut debt and cut the cost of living.”

Conservative Party

Sir Mel Stride MP, Shadow Chancellor of the Exchequer, said:

“Borrowing so far this year has been the highest on record outside the pandemic.

“If Labour had any backbone, they would control spending to avoid tax rises next week. While Labour plan to spend more and more, Conservatives would cut the deficit and cut taxes with our Golden Economic Rule and our £47 billion savings plan.

“Only the Conservatives have a leader with the backbone, the team, and the clear plan to control spending, live within our means, and reduce taxes – delivering a stronger economy.”

ENDS

Notes to Editors: 

Labour inherited a recovering economy:

• Labour inherited the fastest growing economy in the G7. Labour inherited the fastest growing economy in the G7 when 0.7 per cent growth was recorded between January and March 2024 (ONS, GDP Quarterly national Accounts, UK: January to March 2024, 28 June 2024, link).

• Labour inherited inflation at two per cent. After inflation reached 11.1 per cent in October 2022 in the wake of the pandemic and Russia's illegal invasion of Ukraine, it was brought down to 2.0 per cent by June 2024 – bang on the Bank of England's target (ONS, Consumer price inflation time series (MM23), 17 July 2024, link).

• Labour inherited falling borrowing and a budget deficit of 4.4 per cent – less than half of what it was in 2010. Labour leftPublic Sector Net Borrowing at 10.3 per cent of GDP in 2010, they inherited it at 4.4 per cent, forecast to fall 1.2 per cent by 2028-29 (OBR, Public finances databank 2023-24, 25 April 2024, link).

Labour's first Budget trapped Britain in a doom loop of high spending, more borrowing and higher taxes: 

• Labour increased spending by half a trillion pounds. Labour plan to spend half a trillion pounds – £485 billion – more over the course of the Parliament than the plans they inherited, despite Rachel Reeves' claim Labour's policies were ‘fully costed, fully funded and deliverable within [our] inheritance' (OBR, Economic and Fiscal Outlook, 26 March 2025, link; BBC Breakfast, 8 February 2024, archived). 

• Labour ‘fiddled the figures' to borrow more, doubling the deficit. Despite promising not to ‘fiddle the figures', Labour announced a new fiscal rule, increasing Public Sector Net Borrowing from £39.4 billion to £77.4 billion in 2028-29 – doubling the deficit (OBR, Economic and Fiscal Outlook, 30 October 2025, link; OBR, Economic and Fiscal Outlook, 26 March 2025, link). 

• Labour hiked taxes to a ‘historic high'. Labour's last Budget raised taxes by £40 billion – far above the £7 billion of tax hikes in their manifesto – pushing the tax burden to a historic high of 37.7 per cent of GDP. Despite their manifesto pledge to avoid tax hikes on ‘working people', Rachel Reeves introduced a Jobs Tax that the independent Institute for Fiscal Studies (IFS) said will be paid for ‘largely by working people' and increase the cost of employment by £900 for the average worker (OBR, Economic and Fiscal Outlook, 26 March 2025, link; The Labour Party, Change, 13 June 2024, link; IFS, IFS Initial Response to Autumn Budget 2024, 30 October 2024, link).

The Conservatives will stabilise the public finances – allowing us to cut tax:

• We will deliver £47 billion of savings. Under our Golden Economic Rule, for every pound saved, at least half will go to cutting the deficit, with the remainder being used to getting our economy moving. We will deliver these savings by:

• This means we can cut tax. At Conservative Party Conference, we announced our plan to:

Institute for Fiscal Studies

Responding to today's ONS figures on the public finances, Nick Ridpath, Research Economist at the Institute for Fiscal Studies, said: 

“Today's figures show that government borrowing has continued to exceed the OBR's forecast for the year to date, to the tune of around £10 billion. This overshoot is driven by a combination of lower-than-expected tax receipts and higher-than-expected borrowing by councils and other bodies outside of central government control.  What this highlights is that forecasts for the level of borrowing this year are subject to considerable uncertainty, never mind those for borrowing in four or five years' time. Operating with minimal fiscal margin for error is risky, and this is one reason why the Chancellor might sensibly take steps to increase her so-called ‘fiscal headroom' at next week's Budget.” 

Today, the Office for National Statistics published new figures on government revenues, spending, and borrowing, which means we now have provisional public data on the public finances for the first seven months of the 2025-26 financial year. This is the last such data release before next Wednesday's Budget. 

• In the seven months up to October in the financial year 2025-26, public sector net borrowing was £116.8 billion, £9.9 billion (9%) more than expected at the OBR's March forecast and £9.0 billion (8%) more than the £107.8 billion that the government borrowed in the first seven months of 2024-25. Around one-third of this overshoot stems from higher-than-expected borrowing by local authorities, likely reflecting high spending on support for children with special educational needs.  

• The government might have hoped that higher-than-expected inflation this year would have fed through into higher tax receipts, especially from VAT. So far, though, there is no sign of VAT receipts exceeding expectations, with accrued VAT receipts net of refunds up to October remaining slightly below forecast.  Income tax receipts are also running slightly below forecast. Overall central government receipts for the financial year up to October are £2.8 billion below forecast.   

This data will be subject to revision, and we should not over-read into monthly fluctuations. Today's release does, nonetheless, highlight important context for next week's Budget:  uncertainty around tax revenues, pressures on public spending, and stubbornly high costs of servicing government debt. IFS researchers will give their verdict on the Chancellor's announcements at an online event at 10:30 next Thursday. 

Figure 1 Borrowing up to October by financial year: outturns and March 2025 Forecast 

Source: ONS Public Finance Statistics, November 2025, and OBR Economic and Fiscal Outlook, March 2025