Public sector net borrowing (excluding public sector banks) in the UK rose sharply to £20.2 billion in April 2025, up from £19.1 billion a year earlier and notably exceeding market expectations of £17.9 billion.
UK public borrowing surpasses expectations
This represents the fourth-highest April borrowing figure on record since monthly data collection began in 1993, underscoring persistent fiscal pressures facing the government at the start of the new fiscal year.
The increase in borrowing was driven by a £6.6 billion rise in total public sector spending compared to April 2024. This surge primarily reflected higher outlays on public services, including healthcare and education, as well as increased benefit payments amid rising living costs and inflationary pressures. Partially offsetting these increases was a reduction in debt interest payments, benefiting from slightly lower government bond yields and refinancing at favorable rates.
On the revenue side, total public sector receipts grew by £5.6 billion year-on-year, supported by a robust rise in central government tax revenues. This was boosted in part by higher National Insurance contributions, following the recent increase in the employer’s rate implemented in April 2025 as part of efforts to shore up social care funding and support public finances. Additionally, stronger income tax receipts and VAT collections contributed to the revenue uptick, reflecting a relatively resilient labor market and consumer spending despite broader economic uncertainties.
Public sector net debt amounts to 95.5% of GDP
Public sector net debt, excluding public sector banks, was estimated at £2.53 trillion, or 95.5% of GDP, at the end of April. This marks a 0.7 percentage point increase compared to the same period last year and remains close to levels not seen since the early 1960s. The elevated debt ratio highlights ongoing challenges for fiscal sustainability, particularly as inflation, interest rates, and demographic pressures continue to strain public finances.
Looking ahead, policymakers face a delicate balancing act between supporting economic growth and managing fiscal discipline. The high borrowing and debt levels reinforce the importance of credible medium-term fiscal plans to reassure markets and maintain confidence in the UK's economic outlook.
