Key facts
- Public sector net borrowing was £8.1 billion above OBR forecast for the financial year to August.
- Borrowing in August 2026 was £18.3 billion, £3.5 billion above forecast.
- Higher inflation on debt interest and social benefits contributed £4.5 billion to increased spending.
- Conflict in the Middle East may increase borrowing by £10-15 billion in 2029-30.
Public sector net borrowing was £8.1 billion above the Office for Budget Responsibility's forecast for the financial year to August, largely driven by higher-than-expected spending and reflecting the impact of inflation. Despite slightly better-than-forecast tax receipts, August saw an unwelcome deterioration in the public finances, according to the Resolution Foundation. Borrowing was £18.3 billion in August 2026, £3.5 billion above the OBR forecast, and £77.3 billion in the financial year to August, £8.1 billion above forecast. Higher inflation on debt interest and net social benefits accounted for £4.5 billion of the £6.3 billion increase in central government spending year to date. Conflict in the Middle East is likely to deliver a £10-15 billion hit to borrowing in 2029-30, the year in which fiscal rules bind.