UK debt costs surge, borrowing nears record

UK public sector borrowing rose sharply in June 2025, hitting £20.7 billion — £6.6 billion more than a year earlier — marking the second-highest June figure since monthly records began in 1993, the Office for National Statistics (ONS) said on Tuesday.

The increase was driven largely by a surge in interest payments on central government debt, which reached £16.4 billion in June, up £8.4 billion from June 2024.

This was the second-highest June interest payment since comparable records began in 1997, fuelled by the inflation-linked nature of gilt repayments tied to the Retail Prices Index.

Borrowing for the financial year to June totalled £57.8 billion, £7.5 billion more than in the same period of 2024, and the third-highest April-to-June figure since records began — behind only 2020 and 2021, during the pandemic.

The current budget deficit, which excludes investment and focuses on day-to-day spending, reached £16.3 billion in June 2025 — £7.1 billion higher than a year ago, and again the third-highest June figure on record.

For the financial year to date, the current budget deficit was £44.5 billion, £6.5 billion above the same period in 2024.

Public sector net debt excluding public sector banks stood at 96.3 per cent of GDP at the end of June — up 0.5 percentage points from a year earlier and remaining at levels last seen in the early 1960s.

Meanwhile, public sector net financial liabilities were estimated at 83.8 per cent of GDP, 2.2 points higher than in June 2024 but notably below the net debt figure.

The central government’s net cash requirement, excluding UK Asset Resolution Ltd and Network Rail, was £15.8 billion in June — up £1.3 billion year-on-year.

Attribution: Amwal Al Ghad English
Subediting: M. S. Salama