Public sector net borrowing in the UK rose to £24.3 billion in April 2026, the highest April reading since 2020 and £3.4 billion above the £20.9 billion forecast by the Office for Budget Responsibility, according to figures published by the Office for National Statistics on Friday. The figure was £4.9 billion higher than the same month a year earlier, when borrowing came in at £20.2 billion.
Borrowing is the difference between what the government spends and what it raises in tax and other receipts. The April figure opens the 2026/27 financial year ahead of OBR projections and adds further pressure on the Chancellor Rachel Reeves to either raise taxes or cut spending in the Autumn Budget.
Where the money went
ONS chief economist Grant Fitzner said the April figure was "substantially higher" than the year before, with higher tax receipts being "more than offset by higher spending on benefits and other costs". Net social benefits paid out by central government rose by £2.7 billion compared with April 2025, which the ONS attributed in part to inflation-linked uprating of working-age and pensioner benefits at the start of the new financial year.
Central government debt interest costs also remained elevated. Rob Wood, chief UK economist at Pantheon Macroeconomics, estimated that if gilt yields hold at current levels for the rest of the year, debt interest costs in 2026/27 will be around £15 billion higher than assumed in the November Budget. He attributed part of the elevated yield environment to "political risk".
Retail sales also fell
Separate data from the ONS published the same day showed retail sales volumes fell in April at the fastest monthly pace in almost a year. The decline was driven by lower demand for motor fuel after pump prices rose, alongside reduced volumes at non-food stores. The combination of weaker tax receipts on consumption and higher benefit spending is a particularly difficult mix for the public finances.
What the government is doing
The figures landed a day after the Treasury announced a cost-of-living package including a temporary cut in VAT on family attractions and children's meals from 20 to 5 per cent over the summer school holidays, free bus travel for children aged five to fifteen in England in August, and cuts to import duty on a range of basic foods. The Treasury said the package would be funded by closing a tax loophole used by some UK-based oil and gas companies.
The hospitality VAT cut is estimated to cost around £300 million. The wider package is intended to ease pressure on household budgets as the cost-of-living squeeze continues, but does not directly address the underlying borrowing trajectory.
Economist reactions
Ruth Gregory, deputy chief UK economist at Capital Economics, said the figures "highlight the deteriorating growth outlook and fragile fiscal backdrop that will face whoever is in 10 Downing Street". Dennis Tatarkov, senior economist at KPMG UK, said lower growth forecasts for the UK meant that public sector borrowing was likely to remain elevated through the year.
The Institute for Fiscal Studies has previously warned that the Chancellor's fiscal headroom against her own rules is wafer-thin and that any sustained overshoot on borrowing would force a choice between tax rises, spending cuts or a relaxation of the rules at the Autumn Budget.
What happens next
The April figures are the first full month of the new financial year and are subject to revision. The Treasury will publish further monthly borrowing data through the summer, with the Office for Budget Responsibility's next set of forecasts due alongside the Autumn Budget. The Bank of England's Monetary Policy Committee meets again in June, and gilt market reaction to the April figure will be one factor weighed in any decision on interest rates.
Editor's note
This is a developing news story based on ONS data published 23 May 2026. Figures are subject to revision in subsequent monthly releases. For broader UK personal finance coverage, see the Kaeltripton explore index.
