“UK government borrowing falls in June”

What actually happened

Public sector net borrowing was £16bn in June, £7.9bn lower than June the previous year and marginally below the OBR's £16.3bn forecast. The improvement was driven by higher income tax and VAT receipts and lower inflation-linked debt interest, even as total public debt sat near £3 trillion, roughly the size of the whole economy.

Key facts

• June borrowing came in at £16.0 billion in June 2026, £7.9 billion (33.1%) less than in June 2025, and £0.3bn below the OBR's £16.3bn forecast.
• Year-to-date borrowing reached £57.6bn, down £3.7bn on the same period last year but £2.7bn above the OBR's forecast for the year so far.
• Debt interest paid in June was £11.8bn, down nearly a third year-on-year, but still the fourth-highest June total on record, per the ONS.
• Unemployment held at 4.9%; regular pay growth flat at 3.4% annually, with private-sector wage growth dipping below 3% for the first time since 2020.
• Total public debt sat near £3 trillion, close to the annual value of the entire UK economy.

What to watch for

• Whether the £2.7bn year-to-date overshoot against the OBR forecast widens or narrows in coming months; it currently sits against a headline framed around a single good month.
• The Bank of England's rate decision next week: subdued private-sector wage growth strengthens the case for holding the rate at 3.75%, per KPMG's chief economist.
• Whether "fiscal credibility" rhetoric from the Chancellor survives if the PM uses the fiscal rules' "flexibility," which could reverse this month's borrowing relief.