Public sector finances, UK: July 2026

Public sector borrowing in July 2026 was marginally higher than a year earlier, as spending growth outpaced receipts despite strong self-assessed income tax revenue.

Borrowing in the financial year to July 2026 was below the same period last year, but higher than the official government forecast.

Debt remained just below £3 trillion at end of July 2026, although debt as a share of the economy was lower than a year earlier.

Public sector net borrowing

• Borrowing – the difference between total public sector spending and income – was £1.8 billion in July 2026; this was £0.7 billion (68.7%) more than in July 2025, and £2.3 billion above the Office for Budget Responsibility (OBR) forecast.

• Self-assessed (SA) income tax receipts in July 2026 were £17.1 billion, £1.7 billion more than in July 2025; however, because of the possibility of delayed July payments, we recommend considering July and August SA income tax receipts as a whole when making year-on-year comparisons.

• Borrowing was £56.7 billion in the financial year (FY) to July 2026; this was £6.0 billion (9.6%) less than in the same period last year, but £2.3 billion above the OBR forecast.

• Borrowing in the FY to July 2026 was 1.8% of gross domestic product (GDP); this was 0.3 percentage points lower than in the same period a year earlier, and the 12th lowest April to July period since comparable monthly records began, in 1993.

Public sector current budget deficit

• The current budget – borrowing used to fund day-to-day public sector activities - was in surplus by £3.1 billion in July 2026, bringing the total in the FY to July 2026 to £37.5 billion; this was £6.9 billion (15.5%) less than in the same period last year, but £0.2 billion above the OBR forecast.

Public sector net debt

• Public sector net debt – the amount owed to the UK private sector and overseas, less liquid assets - was provisionally estimated at £2,984.9 billion at the end of July 2026, £95.9 billion more than a year earlier.

• Debt at the end of July 2026 was equivalent to 94.1% of GDP, 0.8 percentage points lower than a year earlier, and at levels last seen in the early 1960s.

Public sector net financial liabilities

• Public sector net financial liabilities – a wider balance sheet measure than net debt, which includes additional financial assets and liabilities – were provisionally estimated at £2,657.7 billion at the end of July 2026, £127.2 billion more than a year earlier.

• Net financial liabilities were 83.7% of GDP at the end of July 2026; this was 0.6 percentage points higher than a year earlier, and 10.4 percentage points lower than net debt, as the additional financial assets included exceed the additional financial liabilities.

Central government net cash requirement

• Central government net cash requirement (excluding UK Asset Resolution Limited and Network Rail Limited) - the additional cash needed to be raised from the financial markets to finance activities - was £2.8 billion in July 2026; this was £3.1 billion (52.7%) less than in July 2025, but £3.9 billion above the OBR forecast.

User needs of country and regional public sector finances statistics 

Country and regional public sector finances (CRPSF) is our annual publication providing estimates of public sector revenue, expenditure and net fiscal balance across the UK countries and regions. We would like to hear how you use CRPSF statistics, including which outputs and data are most valuable to you, whether there are any barriers to accessing, interpreting or using the information, and suggestions for improvements to be made.

Improvements and data updates in September 2026

In September 2026, we expect to make some of our regular annual data updates to incorporate the latest available data and classification decisions. These include:

• updates to the estimates of public sector pension funds' liabilities

• recognition and valuation of equity in multilateral development banks

• updates to modelling of central government lease liabilities

• the inclusion of Scottish National Investment Bank into UK public sector finance statistics

Further information is available in our Economic statistics classifications and developments in public sector finances: August 2026 article.

Public sector borrowing was £1.8 billion in July 2026, the sixteenth-lowest July on record (not adjusted for inflation). This was £0.7 billion (68.7%) higher than a year earlier, because spending growth outpaced receipts despite strong self-assessed (SA) income tax revenue payments, typically received each July and January.

Our Public sector finances borrowing by subsector: Appendix R dataset provides further detail on data presented in Table 1 and includes the option to select other time periods.

Central government borrowing

Central government is the largest subsector of the public sector and is typically the main contributor to changes in monthly public sector borrowing. As in previous years, borrowing in July 2026 was lower than in recent months because of SA income tax payments made during the month. However, despite higher tax receipts, central government borrowing was £6.4 billion in July 2026, £1.1 billion more than a year earlier.

Central government receipts

Strong growth in income-related taxes contributed to higher tax receipts in July 2026 compared with a year earlier.

Our Public sector current receipts: Appendix D dataset provides a detailed breakdown of central government income.

Self-assessed income tax

SA income tax receipts were provisionally estimated at £17.1 billion in July 2026, £1.7 billion more than in July 2025. This was £0.4 billion less than forecast by the Office for Budget Responsibility (OBR) but the highest in any July since monthly records began, in 1999 (not adjusted for inflation).

The revenue raised through SA income tax primarily affects receipts in July, but also tends to lead to higher receipts in August, although to a lesser extent. This is because any delayed July payments will be recorded in August instead.

We recommend considering July and August SA receipts together when making year-on-year comparisons.

Value Added Tax receipts

The UK Government's Great British Summer Savings scheme has temporarily reduced the Value Added Tax (VAT) rate on certain family-focused activities and children's meals, from 25 July to 1 September 2026.

The scheme lowers the VAT rate on eligible transactions from 20% to 5%, reducing VAT receipts during the period it is in effect. The UK Government has estimated that the scheme will cost around £300 million in total.

Central government current expenditure

Central government spending data for July 2026 are provisional and subject to revision as more detailed departmental information becomes available.

This month, spending on public services, benefits and other costs was higher than a year earlier. Although debt interest payable was lower than in recent months, it remained slightly above July 2025.

Central government debt interest costs

Central government borrowing is mainly financed by issuing gilts by the Debt Management Office. The UK government then pays interest to the investors who hold these gilts.

The interest payable on index-linked gilts rises and falls with the Retail Prices Index (RPI), adding volatility to central government debt interest costs. 

Capital uplift (the RPI-linked component) added £1.3 billion to interest payable in July 2026, largely reflecting the 0.2% increase in RPI between April and May 2026.

Capital uplift is accrued throughout the life of each index-linked gilt, but is paid to gilt holders as interest at redemption. Accrued capital uplift is shown as the light blue portion of each stacked bar in Figure 3

Central government current budget deficit

The central government current budget, which represents the amount of borrowing required to fund its day-to-day activities, was in surplus by £3.5 billion in July 2026. This surplus was £0.7 billion smaller than in July 2025.

The July 2026 surplus reflects the difference between £104.3 billion in current receipts and £97.0 billion in current expenditure, after accounting for £3.9 billion in depreciation.

The current budget balance excludes borrowing to finance capital investment and, therefore, provides an indication of whether current receipts are sufficient to meet the costs of day-to-day public services, welfare and administration.

Our Public sector finances borrowing by subsector: Appendix R dataset presents central government current budget deficit as a component of the total public sector current budget deficit. It also provides an additional breakdown of its components.

One of the government's fiscal objectives is to achieve a surplus in the public sector current budget by the financial year ending March 2030. Further information is provided in Section 6: UK fiscal targets.

Central government net investment 

Central government net investment was £9.8 billion in July 2026, £0.5 billion more than in July 2025. This includes £3.1 billion transferred from HM Treasury to the Bank of England (BoE) Asset Purchase Facility (APF) Fund.

The quarterly payment from HM Treasury to the APF Fund was £0.3 billion lower in July 2026 than in July 2025. These transfers are intra-public sector transactions and, therefore, do not affect overall public sector borrowing, as they are recorded simultaneously as central government expenditure and as income received by the BoE.

Comparing our July 2026 borrowing estimates with official forecasts

Public sector borrowing was £2.3 billion above forecast in July 2026, largely because central government borrowed more than anticipated.

The OBR produces the UK Government's official fiscal forecasts, usually twice a year. The latest forecast used in this bulletin was published by the OBR in its Economic and fiscal outlook — March 2026 report, on 3 March 2026, with corresponding monthly profiles published in April 2026. 

The UK Government has confirmed that the date of the 2026 Budget will be Wednesday 28 October. The OBR will publish an updated set of fiscal forecasts to accompany the Budget.

Borrowing in the financial year (FY) to July 2026 was £56.7 billion. This was £6.0 billion (9.6%) less than in the same period last year and £2.3 billion above the Office for Budget Responsibility (OBR) forecast.

Our Public sector finances borrowing by subsector: Appendix R dataset provides further detail on data presented in Table 5 and includes the option to select other time periods.

Central government receipts and expenditure

Central government accounted for most of the borrowing in the FY to July 2026. Higher receipts more than offset increased expenditure, resulting in slightly lower borrowing than in the same period a year earlier.

Central government current budget deficit

The central government current budget deficit was £34.7 billion in the FY to July 2026. This was £4.5 billion less than in the FY to July 2025 but £0.2 billion above the OBR forecast.

The deficit for the FY to July 2026 reflects the gap between £372.8 billion in current receipts and £392.0 billion in current spending, after accounting for £15.5 billion of depreciation.

Central government net investment

Central government net investment was £35.8 billion in the FY to July 2026, £3.7 billion more than in the same period last year.

This included a £8.2 billion payment to the Bank of England Asset Purchase Facility Fund, £0.7 billion more than in the FY to July 2025. These payments are recorded as both central government net investment expenditure and Bank of England receipts, so they have no effect on overall public sector borrowing.

Other increases included higher gross capital formation and higher capital payments to other sectors. Some capital payments, such as those made to local authorities, are public sector borrowing-neutral because they are recorded as both central government expenditure and local government income. 

Local government and public corporations' borrowing

Initial estimates show that local government recorded a surplus of £8.2 billion in the FY to July 2026, a surplus that was larger by £3.0 billion than in the same period last year. Over the same period, public corporations borrowed £0.3 billion, compared with a £0.5 billion surplus in the FY to July 2025.

Data for local government and public corporations in the current FY are highly provisional and are largely based on the OBR's Economic and fiscal outlook — March 2026 report. Further information is provided in Section 10: Data sources and quality.

Comparing our financial year to July 2026 borrowing estimates with official forecasts

Public sector borrowing was £2.3 billion above forecast in the FY to July 2026. This was because both central government borrowing and highly provisional estimates of public corporations borrowing were higher than anticipated. These differences were partially offset by the provisional estimate of local government borrowing, which was lower than forecast.

Expressing borrowing as a share of gross domestic product (GDP) provides context for the scale of borrowing relative to the size of the economy and supports comparisons over time.

Provisional estimates indicate that the public sector borrowed £129.8 billion in the financial year ending March 2026, equivalent to 4.2% of GDP. This was broadly in line with the Office for Budget Responsibility’s forecast of 4.3% of GDP and continued the pattern of borrowing in recent years.

Borrowing in the financial year to July 2026 was 1.8% of GDP. This was 0.3 percentage points lower than in the same period a year earlier, and the 12th lowest April to July period since comparable monthly records began, in 1993.

Borrowing measures the flow of public sector finances over a period. Debt and other balance sheet measures provide a snapshot of the public sector's financial position at a point in time, showing its liabilities and assets.

There are several measures of the public sector balance sheet. The relationship between them is summarised in Table 9 and is discussed in our What the UK government owns and what it owes blog.

As a part of its quantitative easing activities, the Bank of England (BoE) purchased central government gilts from the market through the Asset Purchase Facility (APF) Fund. These gilt holdings consolidate within the public sector balance sheet, leaving only the difference between their purchase price and their redemption value. 

Subsequent movements in the market value of these consolidated gilt holdings have no effect on the public sector balance sheet.

The reserves created by the BoE were subsequently loaned to the APF to purchase these gilts. They remain on the public sector balance sheet as a liability in currency and deposits until the loan is repaid.

We publish an additional presentation of the UK public sector balance sheet in our International Monetary Fund's Government Finance Statistics framework in the public sector finances: Appendix E dataset.

Public sector net debt

Public sector net debt is a widely quoted balance sheet measure. Expressing net debt as a ratio of gross domestic product (GDP) gives an estimate of its affordability and provides a more consistent measure for comparison of the UK's fiscal position over time.

The net debt-to-GDP ratio at the end of July 2026 was provisionally estimated at 94.1%; this was 0.8 percentage points lower than in July 2025 and 0.3 percentage points less than the Office for Budget Responsibility (OBR) forecast.

Our How the ONS estimates UK debt to GDP figures blog explains why our estimates of the debt-to-GDP ratio are susceptible to revision.

Our Public sector balance sheet tables: Appendix N dataset presents a detailed reconciliation between the balance sheet measures summarised in Table 9.

Public sector net financial liabilities

Public sector net financial liabilities (PSNFL) is broader than public sector net debt (PSND) because it includes additional financial assets and liabilities.

PSNFL was 83.7% of GDP at the end of July 2026; this was 0.6 percentage points higher than at the end of July 2025.

These extra financial assets are currently valued at more than the extra financial liabilities, meaning that PSNFL was 10.4 percentage points of GDP less than PSND at the end of July 2026.

We explain the financial assets and liabilities captured in PSNFL in our PSNFL methodology.

Additionally, we published our blog explaining the PSNFL measure, because it has been selected by the UK government as the reference for a balance sheet fiscal rule.

The additional financial assets and liabilities included in PSNFL that fall outside of the PSND boundary are not updated monthly. Instead, they are updated quarterly, or when data become available. These data were last updated on 19 June 2026 and will next be updated on 22 September 2026.

A detailed presentation of PSNFL is available in our PSNFL by subsector: Appendix G dataset, last updated on 19 June 2026.

The UK government has legislated for fiscal targets to constrain its management of the public finances. The Autumn Budget 2024 announced that from January 2025, these fiscal targets focus on the public sector current budget deficit and public sector net financial liabilities (PSNFL).

The targets are for the current budget to be in surplus, and for PSNFL to fall as a share of gross domestic product (GDP), by the financial year ending (FYE) March 2030.

Our latest figures show that:

• the public sector current budget deficit was £48.9 billion in the FYE March 2026; this was £27.6 billion less than in the FYE March 2025

PSNFL were initially estimated at 82.6% of GDP at the end of March 2026; this was 1.8 percentage points more than at the end of March 2025

The latest estimates include some forecast-based data. These are replaced with improved estimates as more information becomes available, and later with outturn data.

Tax updates in August 2026

Each month, we incorporate the latest available information into our estimates of tax receipts.

In August 2026, this process coincided with HM Revenue and Customs (HMRC) aligning its provisional tax receipts data for the financial year ending (FYE) March 2026 with the figures published in its Annual report and accounts (ARA): 2025 to 2026, published in July 2026.

HMRC has also introduced monthly alignment of some of its largest receipts categories to further improve data quality.

From August 2026, income tax, National Insurance contributions (NICs) and Value Added Tax (VAT) receipts have been aligned monthly to HMRC accounting data, with the methodology applied retrospectively to receipts from April 2026 onwards. Corporation tax receipts are already aligned to accounting data on a monthly basis.

This methodological improvement strengthens the quality assurance of provisional monthly receipts statistics by increasing the proportion of receipts that are aligned with HMRC accounting data each month. It forms part of HMRC's broader programme of improvements to statistical production and quality, including recommendations arising from the HMRC Statistics Review, which is due to be published shortly.

As a result of these alignment activities, previously published receipts data for the FYE March 2026 and for the current financial year (FY) to June 2026 have been revised beyond the updates typically incorporated through the regular monthly revisions process. For some taxes, including corporation tax, there are also some revisions to earlier years.

As the FYE March 2026 is the first year in which this more frequent alignment approach has been applied, direct comparisons of published income tax, NICs and VAT receipts with earlier periods, including year-to-date comparisons, should be interpreted with caution.

Receipts data from April 2026 onwards remain provisional and may be further revised following the final annual alignment exercise after publication of ARA 2026 to 2027, in summer 2027.

Revisions to public sector net borrowing

Since releasing our Public sector finances, UK: June 2026 bulletin, we have reduced our previous estimate of public sector net borrowing in the financial year (FY) to June 2026 by £2.7 (4.6%) billion to £54.9 billion, to include the latest central government data.

Of the £2.7 billion downward revision to public sector borrowing in the FY to June 2026, £2.0 billion reflected higher central government tax receipts, partially offset by a £0.4 billion reduction in our estimate of NICs.

Within this increase to central government tax receipts, VAT receipts were revised up by £2.0 billion, compared with our previous estimate. This revision incorporates a reduction of £0.7 billion in cash receipts in June 2026. This follows the identification and correction of an error by HMRC through its quality assurance procedures, partially offsetting the overall increase.

Central government expenditure was revised up by £0.3 billion overall, though this net change contained several larger and offsetting revisions. These included an increase of £1.4 billion in transfers to local government. Consequently, our previous estimate of local government borrowing for the FY to June 2026 has been reduced by £1.4 billion.

Our Public sector finance revisions analysis: Appendix P dataset records monthly borrowing data, as at first and at subsequent publications, graphically illustrating any potential bias to our early estimates.

Revisions to public sector net debt at the end of June 2026

Since publishing our Public sector finances, UK: June 2026 bulletin, we have increased our estimate of debt at the end of June 2026 by £4.9 billion (0.2%) to £2,994.8 billion.

This is largely because of updated Bank of England (BoE) data. Revisions of this magnitude are not uncommon, as some underlying BoE data are reported with a one-month lag.

Revisions to gross domestic product

This month's release incorporates gross domestic product (GDP) data from our GDP first quarterly estimate, UK: April to June 2026 bulletin, published on 13 August 2026. The updated GDP estimate for January to March 2026 was higher than the initial estimate, resulting in lower debt-to-GDP ratios for recent months than previously reported.

Public sector

The UK public sector comprises of six subsectors: central government, local government, public non-financial corporations, public sector-funded pensions, the Bank of England (BoE), and public financial corporations.

Figures in this release exclude public sector banks, following the reclassification of NatWest Group to the private sector in May 2024.

Public sector net borrowing

Public sector net borrowing (often referred to as the deficit) is the difference between total expenditure and receipts. Positive numbers indicate a deficit, while negative numbers indicate a surplus.

Public sector current budget deficit

Public sector current budget deficit is the difference between current expenditure and receipts, after accounting for depreciation. It measures the borrowing needed to fund the costs of day-to-day public services, welfare and administration, and is the reference statistic for a UK government fiscal rule. Positive numbers indicate a deficit, while negative numbers indicate a surplus.

Both current budget deficit and borrowing are recorded on an accrual basis, that is, income when earned and spending when incurred, rather than when cash is paid.

Central government net cash requirement

The central government net cash requirement is the cash the government must raise from financial markets to finance its activities. It reflects the timing of payments and receipts rather than when liabilities arise.

Public sector net debt

Public sector net debt (often referred to as the national debt) measures the public sector's liabilities to the private sector and overseas, net of its liquid financial assets.

Public sector net financial liabilities

Public sector net financial liabilities (sometimes referred to as net financial debt) is a broader balance sheet measure than net debt, capturing all financial assets and liabilities recognised in the national accounts.

PSNFL is the reference statistic for a UK government fiscal rule.

Public sector net worth

Adding non‑financial assets to PSNFL results in public sector net worth, the widest measure of the public sector balance sheet.

About the statistics

About our data sources

Statistical designation

The Office for Statistics Regulation (OSR) independently reviewed the public sector net borrowing, cash requirement, and debt statistics in July 2017, concluding that they comply with the standards of trustworthiness, quality, and value in the Code of Practice for Statistics and should be labelled accredited official statistics. 

The public sector net financial liabilities and public sector net financial worth statistics are both official statistics. These measures were introduced after July 2017, so have not yet been reviewed by the OSR. The public sector net worth statistics are labelled as official statistics in development. They are based on information from public sector finance and data from the Office for National Statistics' (ONS) non-financial accounts.

International reporting standards

All aggregates in this bulletin are reported in accordance with the 2010 European system of national and regional accounts (ESA 2010) (PDF, 6.4MB), unless otherwise stated.

HM Revenue and Customs data quality review

On 8 October 2025, HM Revenue and Customs (HMRC) reported an under-estimation in its Value Added Tax (VAT) cash receipts data for the period April to August 2025.

HMRC implemented immediate improvements to quality assurance processes, including comparisons with independent data sources, working with HM Treasury and the ONS. HMRC is carrying out a robust review across all receipts to consider the underlying issue and to identify actions to minimise the risk of similar incidents in future. The review is due to be published shortly.

We are working with HM Treasury to support this process. The Office for Statistics Regulation will provide an independent perspective on HMRC's review to ensure compliance with the Code of Practice for Statistics.

We have reported progress on work to improve the quality of public sector finance statistics in the second quarterly update on the Economic Statistics Plan in our ONS surveys and economic statistics improvement plan, quarterly progress update: July 2026.

Local government data quality

Local government data for the financial year ending (FYE) March 2027 are highly provisional estimates for the UK. They are largely based on the Office for Budget Responsibility's (OBR's) Economic and fiscal outlook —March 2026 report.

Data for the FYE March 2026 remain provisional estimates for the UK. They are largely based on local authority budget data for England, Scotland and Wales, and estimates for Northern Ireland.

For the FYE March 2025, estimates of the current expenditure of local authorities in England are based on published second release data; capital expenditure and receipts are based on published final outturn data.

Estimates for the devolved administrations for the FYE March 2025 are based on published outturn data for Wales and Scotland, and final returned data for Northern Ireland.

In recent years, planned local government current and capital expenditure in local authority budgets have differed from the final outturn expenditure reported in the audited accounts. Current expenditure was also systematically lower than what was reported at final outturn.

Therefore, we may include adjustments to increase or decrease the amounts reported at the budget stage.

For the FYE March 2026, these adjustments include:

• a £2.0 billion upward adjustment to England's current expenditure

• a £3.0 billion upward adjustment to England's capital expenditure

• a £2.4 billion upward adjustment to Scotland's current expenditure

To reflect the most recently available data for housing benefits, we have applied a further £2.7 billion downward adjustment to current expenditure in the FYE March 2026.

Public corporations' data quality

Public corporations' data for the current financial year are highly provisional estimates for the UK. They are largely based on the OBR's Economic and fiscal outlook — March 2026 report.

Estimates for the FYEs March 2025 and March 2026 remain largely based on the OBR's Economic and fiscal outlook— November 2025 report. This was supplemented by in-year data for train operating companies, the Housing Revenue Account, and surveyed public corporations.