UK government borrowing came in well above forecasts in May, piling fresh pressure on the public finances just as Westminster braces for a potential change of leadership.
Public sector borrowing rose to £23.3 billion in May 2026, £5.4 billion higher than a year earlier and £5.6 billion above the £17.7 billion forecast by the Office for Budget Responsibility. For the financial year to May, borrowing reached £46.3 billion, some £8.9 billion higher than the same period last year and £7.7 billion above the OBR's forecast. May's borrowing was the second-highest recorded for the month, excluding the effects of inflation.
Debt interest payments were a key driver, climbing to £11.7 billion in May - a record for the month and up £4.1 billion year-on-year - largely due to inflation-linked debt costs, with movements in the Retail Prices Index adding £4.9 billion to the bill.
Central government receipts rose £3.4 billion, or 4.1%, to £85.5 billion in May, with tax receipts up £2.7 billion to £63.7 billion on stronger VAT, income tax and corporation tax revenues. But spending outpaced that growth, with current expenditure up £6.4 billion, or 7.1%, to £95.7 billion, driven by higher debt interest costs alongside inflation-driven increases in departmental spending and social benefit payments.
Public sector net debt stood at 95.1% of GDP at the end of May, up 0.4 percentage points year-on-year and at levels last seen in the early 1960s. Net financial liabilities stood at 84.7% of GDP. The ONS said the figures are initial estimates and may be revised.
AJ Bell's Danni Hewson called the figures "a chillingly well-timed reminder to any would-be prime minister that the bond markets matter," noting debt interest alone accounted for almost half of May's borrowing. She pointed out that much of the rise stemmed from higher inflation following the eruption of conflict in the Middle East, and said borrowing costs will be watched closely amid the anticipated Labour leadership contest following Andy Burnham's Makerfield by-election win.
Burnham, she noted, has pledged to stick to existing fiscal rules, "though that pledge is based on a future budget," with the current deficit already £7 billion higher than last year, despite the positive impact of tax changes."
