Public sector finances, UK: June 2026

Public sector borrowing fell one third in June 2026 compared with a year earlier, as receipts rose while expenditure decreased slightly, largely because of lower inflation-linked debt interest costs.

Borrowing in financial year (FY) to June 2026 was the 10th highest April to June period since comparable monthly records began in 1993.

Debt remains high by historical standards and close to the annual value of the entire UK economy.

Public sector net borrowing

• Borrowing – the difference between total public sector spending and income – was £16.0 billion in June 2026; this was £7.9 billion (33.1%) less than in June 2025, and £0.3 billion below the Office for Budget Responsibility (OBR) forecast, largely because of lower inflation-linked debt interest costs.

• Central government debt interest payable was £11.8 billion in June 2026; this was £5.3 billion (31.0%) less than in June 2025 but still the fourth highest June on record (not adjusted for inflation), largely reflecting volatility from gilts linked to the Retail Prices Index.

• Borrowing was £57.6 billion in FY to June 2026; this was £3.7 billion (6.0%) less than in the same period last year but £2.7 billion above the OBR forecast, partly reflecting differences in provisional public corporations data.

• Borrowing in the FY to June 2026 was 1.9% of gross domestic product (GDP); this was 0.2 percentage points lower than the same period a year earlier, and the 10th highest April to June period since comparable monthly records began in 1993.

Public sector current budget deficit

• The current budget deficit – borrowing used to fund day-to-day public sector activities – was £11.8 billion in June 2026, bringing the total in FY to June 2026 to £42.0 billion; this was £5.0 billion (10.7%) less than in the same period last year, and £1.3 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 £2,989.9 billion at the end of June 2026, £122.3 billion more than a year earlier.

• Debt at the end of June 2026 was equivalent to 94.9% of GDP, 0.4 percentage points higher 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 that includes additional financial assets and liabilities – were provisionally estimated at £2,662.5 billion at the end of June 2026, £154.3 billion more than a year earlier.

• Net financial liabilities were 84.5% of GDP at the end of June 2025; this was 1.8 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 £19.2 billion in June 2026; this was £3.5 billion (22.3%) more than in June 2025 but £2.9 billion below the OBR forecast.

Public sector borrowing was £16.0 billion in June 2026, the seventh-highest June on record (not adjusted for inflation). This was a reduction of £7.9 billion (33.1%) compared with a year earlier, as receipts grew faster than expenditure, largely reflecting lower inflation-linked debt interest costs.

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. Higher tax and other receipts, together with a slight reduction in expenditure, resulted in central government borrowing of £16.4 billion in June 2026, £6.7 billion less than a year earlier.

Central government receipts

Strong growth in tax receipts, particularly from income-related taxes and Value Added Tax (VAT) in June 2026, contributed to a year-on-year reduction in borrowing.

Value Added Tax receipts

The UK Government's Great British Summer Savings scheme has temporarily reduced the VAT rate on certain family-focused activities and children's meals from 25 June 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 June 2026 are provisional and are subject to revision as more detailed departmental information becomes available.

This month, there was a substantial reduction in debt interest payable, which was more than offset by higher spending on public services, benefits and other costs.

Central government debt interest costs

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

Central government debt interest payable was £11.8 billion in June 2026. This was £5.3 billion lower than in June 2025. Although this was a 31.0% year-on-year decrease, it was still the fourth highest June figure on record (not adjusted for inflation).

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 £4.8 billion to interest payable in June 2026, largely reflecting the 0.7% increase in RPI between March and April 2026.

The increase in the RPI between March and April is often larger than in other months, reflecting the timing of annual price and tariff changes that take effect each spring.

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 2.

Central government current budget deficit

The central government current budget deficit — the portion of net borrowing used to fund day-to-day activities — was £9.8 billion in June 2026. This was £7.3 billion lower than in June 2025, and £1.5 billion below the Office for Budget Responsibility’s (OBR) forecast.

The June 2026 deficit reflects the gap between £91.6 billion in current receipts and £97.5 billion in current spending, after accounting for £3.9 billion of depreciation.

The current budget excludes borrowing for capital investment and measures whether current receipts are sufficient to fund day-to-day spending. One of the government’s fiscal targets is to balance the public sector current budget over time. Further information is provided in Section 6: UK fiscal targets.

Our Public sector finances borrowing by subsector: Appendix R dataset provides additional detail on the components of the central government current budget deficit, and the current budget positions of each subsector.

Comparing our June 2026 borrowing estimates with official forecasts

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.

Public sector borrowing was £0.3 billion below forecast in June 2026, with both central and local government borrowing less than anticipated.

Borrowing in the financial year (FY) to June 2026 was £57.6 billion. This was £3.7 billion (6.0%) less than in the same period last year and £2.7 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 FY to June 2026. Higher receipts 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 £39.0 billion in FY to June 2026. This was £4.0 billion less than in FY to June 2025 but £0.3 billion above the OBR forecast.

The FY to June 2026 deficit reflects the gap between £266.8 billion in current receipts and £294.2 billion in current spending, after accounting for £11.6 billion of depreciation.

Central government net investment

Central government net investment was £26.4 billion in FY to June 2026, £3.6 billion more than in the same period last year.

This included a £5.1 billion payment to the Bank of England Asset Purchase Facility Fund, £1.0 billion more than in FY to June 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 was in surplus by £1.0 billion in FY to June 2026; this surplus was larger by £0.8 billion than in the same period last year. Over the same period, public corporations borrowed less than £0.1 billion, compared with a £0.1 billion surplus in FY to June 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 June 2026 borrowing estimates with official forecasts

Public sector borrowing was £2.7 billion above forecast in FY to June 2026, largely because central government borrowing, as well as highly provisional estimates of public corporations borrowing, were more than anticipated.

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 £128.0 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 June 2026 was 1.9% of GDP. This was 0.2 percentage points lower than the same period a year earlier, and the tenth highest April to June 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 the quantitative easing activities of the Bank of England (BoE), it 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.

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 June 2026 was provisionally estimated at 94.9%; this was 0.4 percentage points higher than in June 2025 and in line with 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 84.5% of GDP at the end of June 2026; this was 1.8 percentage points higher than at the end of June 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 June 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 by the financial year ending (FYE) March 2030, and for PSNFL to be falling as a share of gross domestic product (GDP) by the same year. 

Our latest figures show that:  

• the public sector current budget deficit was £47.1 billion in the FYE March 2026; this was £29.2 billion less than in the FYE March 2025 

• PSNFL were initially estimated at 83.2% of GDP at the end of March 2026; this was 2.1 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.

Revisions to public sector net borrowing

Since releasing our Public sector finances, UK: May 2026 bulletin, we have reduced our previous estimate of public sector net borrowing in financial year (FY) to May 2026 by £4.8 (10.3%) billion to £41.6 billion, to include the latest central government data.

Of the £4.8 billion downward revision to public sector borrowing in FY to May 2026, £2.2 billion reflected higher central government tax receipts and a further £0.8 billion resulted from increased National Insurance contributions.

Central government expenditure was revised down by £0.3 billion overall, though this net change contained several larger and partially offsetting revisions. These included a £2.0 billion increase in current transfers to local government, partly offset by lower capital transfers. Consequently, our previous estimate of local government borrowing for FY to May 2026 has been reduced by £1.5 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 May 2026

Since publishing our Public sector finances, UK: May 2026 bulletin, we have revised down our estimate of debt at the end of May 2026 by £8.3 billion (0.3%) to £2,976.0 billion.

This mainly reflects updated Bank of England (BoE) data, which reduced its contribution to debt by £8.5 billion. This comprised a £7.8 billion reduction in estimated liabilities and a £0.7 billion increase in liquid assets. Revisions of this magnitude are not uncommon, as some underlying BoE data are reported with a one-month lag.

Revisions to GDP

This month we have updated our release to include data from our Gross domestic product (GDP) quarterly national accounts, UK: January to March 2026, published on 30 June 2026. This update had a negligible effect on our previous estimates of debt expressed as a percentage of GDP.

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 June 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 day-to-day activities 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 June 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 June 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.  

HM Revenue and Customs data quality review 

On 8 October 2025, HM Revenue and Customs (HMRC) reported an under-estimation in its 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 Office for National Statistics (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. 

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 strategic improvement update: July 2026. 

Tax updates expected in our August 2026 publication

Each month, we routinely incorporate the latest available data into our receipts estimates.

In August 2026, this coincides with HMRC aligning its provisional tax receipts for financial year ending (FYE) March 2026 with its published Annual report and accounts: 2025 to 2026, published in July 2026.

At the same time, HMRC expects to introduce monthly alignment for some of the largest taxes to further improve data quality.

These alignment activities are expected to result in revisions to previously published receipts data for FYE March 2026 and for the current financial year to June 2026, beyond the regular monthly updates.  

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)  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 with estimates included 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, while 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, with current expenditure 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 FYE March 2025 and FYE March 2026 remain largely based on the OBR's Economic and fiscal outlook – November 2025 report, supplemented by in-year data for train operating companies, the Housing Revenue Account, and surveyed public corporations.