Public sector borrowing in August has soared to its highest level in five years, sparking concerns over substantial tax increases in the autumn to restore fiscal balance.
Borrowing – the gap between total public sector expenditure and revenue – reached £18bn in August 2025, £3.5bn higher than the previous year and the largest figure since 2020, when the economy had stalled following coronavirus restrictions, as reported by .
Borrowing in the financial year to August 2025 stood at £83.8bn, £16.2bn above the equivalent five-month period in 2024 and representing the second-highest April to August borrowing since monthly records commenced in 1993.
READ MORE: {}
Meanwhile, public sector net debt excluding public sector banks has been calculated at 96.4 per cent of GDP at the end of August 2025; 0.5 percentage points higher than the previous year and maintaining levels not witnessed since the early 1960s.
Tax increases anticipated
This development emerges as the government is broadly anticipated to announce significant tax rises in its Autumn Budget to finance expanding spending obligations.
Lindsay James, investment strategist at Quilter, commented: "Once again the 海角视频 government's borrowing for August highlights why it seems all but certain that tax rises are coming at the Budget in two months' time.
"These figures are staggering and are not showing an economy that is in rude health."
James Murray, Chief Secretary to the Treasury, stated: "This Government has a plan to bring down borrowing because taxpayer money should be spent on the country's priorities, not on debt interest.
Most Read
"Our focus is on economic stability, fiscal responsibility, ripping up needless red tape, tearing out waste from our public services, driving forward reforms, and putting more money in working people's pockets."
The Treasury may be compelled to generate up to £50bn through additional tax increases to remain within its fiscal constraints, according to the National Institute of Economic and Social Research (NIESR), exposing the magnitude of potential hardship that Chancellor Rachel Reeves could inflict upon businesses in the months ahead.
The supplementary funds required would equate to an enormous five per cent increase on both standard and higher income tax rates, NIESR indicated, noting that maintaining current tax thresholds at their present levels would generate an additional £8.2bn.
"The really disappointing thing from my point of view was that when Labour came in there didn't seem to be a plan on the table," said NIESR deputy director, professor Stephen Millard.
"A lot of problems the chancellor is facing now could have been headed off at the pass if they had come in with a clear plan."
Millard observed there were "really hard decisions the chancellor is going to have to make if she is going to raise that £50bn.
"That requires large increases in taxes – fiddling at the edges is not going to do."