UK Borrowing Surges to £23.3bn in May, Exceeding Expectations
Quick Look
- UK public sector net borrowing hit £23.3bn in May, significantly higher than the £18.5bn forecast by economists.
- This surge, attributed partly to the economic impact of the Iran war and increased interest costs, presents fiscal challenges for potential Labour leader Andy Burnham.
AI-generated summary
Why It Matters
UK public sector net borrowing in May was £23.3bn, exceeding economists' forecasts and presenting fiscal challenges. This surge is partly linked to the economic fallout of the Iran war and increased interest costs.
The UK borrowed a higher-than-expected £23.3bn in May amid the economic fallout of the Iran war, underlining the fiscal challenges facing Andy Burnham if he takes over as Labour leader.
In figures released shortly after Burnham’s victory in the Makerfield byelection, Office for National Statistics (ONS) said public sector net borrowing for the month was the second highest for any May on record.
With interest costs higher than expected as financial markets responded to the Middle East conflict, borrowing was £5.6bn ahead of the Office for Budget Responsibility (OBR) forecast made as recently as March.
City economists had expected much lower borrowing of £18.5bn, down from £24.3bn in April.
Tom Davies, a senior statistician at the ONS, said: “Borrowing in the first two months of the financial year was nearly £9bn higher than in the same period of 2025.
“Spending on debt interest, public services, investment and benefits all increased in May 2026 compared with last May, more than outweighing higher tax receipts.”
Taking the first two months of the new fiscal year together, the ONS said borrowing was £46.3bn – £8.9bn higher than a year ago, and £7.7bn ahead of OBR forecasts.
Open Questions
- What specific economic impacts of the Iran war are affecting UK borrowing?
- How will these fiscal challenges affect public services?
