UK Government Borrowing Hits Highest Post-Pandemic Level Amid Budget Pressures

The UK government’s borrowing reached £18 billion in August 2025, significantly exceeding forecasts and marking the highest monthly total since the Covid pandemic in 2020. From April to August 2025, total borrowing hit £83.8 billion, which is £16.2 billion more than the same period last year and surpasses Office for Budget Responsibility expectations by over £11 billion. This rise in borrowing is attributed to increased spending on public services and debt interest, which outweighed gains from higher tax revenues, including national insurance contributions. The surge in borrowing has intensified fiscal pressures ahead of Chancellor Rachel Reeves’ autumn budget, with widespread expectations of significant tax increases to address a potential £40 billion deficit. Alongside fiscal challenges, the Bank of England maintained its base interest rate at 4% due to persistent inflation concerns, adding to the economic strain. Market reactions included a drop in the FTSE 100 and a slight decline in Brent crude oil prices, reflecting investor unease about the government’s fiscal outlook.