August 2026 UK Public Finances: Widening OBR Deficit and Record Debt-Servicing Costs

Note: This section contains information in English only.
Source: Dukascopy Bank SA
The August 2026 UK Public Sector Finances release shows a substantial deterioration against official forecasts, driven by record debt-servicing costs and mounting spending pressures. Monthly public sector net borrowing reached £18.3 billion—up £2.9 billion year-on-year and £3.5 billion higher than the Office for Budget Responsibility (OBR) profile, marking the second-highest August figure on record behind 2020. This pushes the financial year-to-date borrowing (April–August) to £77.3 billion, leaving cumulative borrowing £8.1 billion above OBR expectations despite a slight 2.7% reduction compared to the same period in 2025.



Expenditure outpaced revenue growth as central government spending rose 5.0% to £103.1 billion, spurred by index-linked uplifts across both public benefits (£29.2 billion) and record August debt interest of £8.8 billion. Although current receipts rose 3.8% to £89.8 billion on strong income tax growth, overall revenue was tempered by weaker VAT receipts following the temporary "Great British Summer Savings" rate reduction. Meanwhile, public sector net debt reached £2,985.5 billion, remaining historically elevated near 1960s levels despite a modest decline in the debt-to-GDP ratio to 93.8% caused by faster nominal economic grow.
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