Stories

Tue, 21 Jul 2026

Tue, 21 Jul 2026 UK borrows less than expected in June but public finances remain a challenge

Public finances for last month were better than expected but the UK is carrying major debt.

* The UK government borrowed £16bn in June, which is £7.9bn lower than last year's figure.
* However, total debt is high by historical standards and close to the annual value of the UK economy.
* The unemployment rate remained unchanged at 4.9%, with regular earnings growth also steady.
* The new Chancellor, John Healey, has pledged to stick to the government's fiscal rules on spending and borrowing.
* The new Prime Minister, Andy Burnham, has announced a cut in VAT on household electricity bills from 5% to zero from October.
* Analysts say the public finances are fragile and there is limited scope for extra borrowing.
* The UK's total debt stands at nearly £3 trillion, with public sector net financial liabilities (PSNFL) equivalent to 84.5% of GDP.
* Wage growth in the private sector fell below 3% for the first time since 2020.
* Experts predict that interest rates may remain on hold at 3.75% when the Bank of England meets next week.