That borrowing is less than half the figure (\u00a32.6bn) expected by economists polled by the Reuters news agency, as self-assessed income tax was \u00a3600m higher than expected.<\/p>\n
But borrowing was still \u00a36bn higher in the first four months of the financial year, which started in April, than the same period in 2024.<\/p>\n
Despite a \u00a32.3bn drop in monthly borrowing when July 2025 is compared with July 2024, the state still spent more on the cost of that lending.<\/p>\n
The amount of interest paid on government debt was \u00a37.1bn, \u00a3200m more than a year earlier.<\/p>\n
Read more: The cost of government borrowing has increased in recent months as the interest rate investors demand on loans issued to the UK (bonds) rose.<\/p>\n At the start of the week, the government’s long-term borrowing cost, as measured by the interest rate on 30-year bonds (known as the gilt yield), closed at the highest level since 1998<\/a>.<\/p>\n What does it mean for the chancellor?<\/p>\n The monthly borrowing data is in line with the predictions made by independent forecasters, the Office for Budget Responsibility (OBR).<\/p>\n It may not be as rosy a picture, however, as research firm Capital Economics point out the cumulative budget deficit, rather than a monthly figure, is \u00a35.7bn above the OBR’s forecast.<\/p>\n 3:06<\/p>\n Are taxes going to rise?<\/p>\n This matters for the chancellor’s self-imposed fiscal rules, to bring down government debt and balance the budget by 2030, the firm said.<\/p>\n “The chancellor will probably need to raise taxes by \u00a317bn to \u00a327bn at the budget later this year,” Capital Economics’ UK economist Alex Kerr said.<\/p>\n Elevated self-assessment income tax receipts “may just reflect the timing of tax returns being recorded, and receipts in August may be weaker than expected”, he added.<\/p>\n
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