UK borrowing climbs to £23.3bn in May as debt costs soar

UK government borrowing reached £23.3 billion in May 2026, exceeding official forecasts by £5.6 billion and highlighting mounting pressure on public finances.

The latest figure represented a sharp increase from the £17.9 billion recorded in May 2025, marking a year-on-year rise of more than 30%.

New data released by the Office for National Statistics on 19 June showed that higher borrowing was largely driven by a surge in debt servicing expenses.

Central government debt interest payments climbed to £11.7 billion during the month, rising 54% compared with the same period a year earlier.

The increase in borrowing came as government spending continued to outpace growth in tax receipts and other revenues.

Total public expenditure reached £118 billion in May, an increase of £9.1 billion from the corresponding month in 2025.

Elevated energy costs and broader inflationary pressures contributed to higher spending across several government departments.

Ongoing tensions in the Middle East continued to influence global energy markets, placing additional strain on procurement and operating budgets.

Government revenues also increased during the month, with receipts rising by £3.7 billion to £94.8 billion.

Despite stronger revenue collections, the improvement failed to keep pace with the rise in expenditure and debt servicing obligations.

Borrowing during the first two months of the current financial year has now reached £46.3 billion.

That total stands £7.7 billion above projections made by the Office for Budget Responsibility.

April borrowing alone amounted to £24.3 billion, also surpassing official expectations and adding to concerns about the fiscal outlook.

The figures suggest that borrowing has remained above forecast levels since the start of the financial year.

Public sector net debt now stands at 95.1% of gross domestic product, reflecting the scale of the government's financial commitments.

The ratio indicates that government debt is almost equal to the total value of goods and services produced by the UK economy in a year.

Analysts noted that debt levels relative to economic output have reached heights not seen since the years following the Second World War.

Inflation-linked government bonds have added another layer of pressure because servicing costs rise automatically when inflation remains elevated.

Persistently high energy prices have contributed to inflation readings that directly affect the cost of these index-linked obligations.

Investors are now watching gilt markets closely, as higher borrowing requirements may lead to increased bond issuance in the months ahead.

A larger supply of government bonds could place upward pressure on gilt yields and raise borrowing costs across the wider economy.

Higher yields may also influence mortgage rates, business financing costs and overall financial conditions throughout the UK.

The figures present a challenge for the Bank of England as policymakers balance inflation concerns against the impact of higher interest rates on public finances.

With borrowing running ahead of expectations and debt costs rising rapidly, pressure is building on the government to either reduce spending or identify additional sources of revenue.