UK Government Borrowing Declines in December 2025

The UK government reported a notable decrease in public sector net borrowing for December 2025, which fell to £11.6 billion. This figure represents a £7.1 billion reduction, or 38%, compared to December 2024 and is lower than the £13 billion anticipated by economists. The Office for National Statistics (ONS) attributed this decline to a substantial increase in tax receipts, which rose by £7.7 billion, or 8.9%, driven by higher income tax, corporation tax, VAT, and National Insurance contributions. Meanwhile, government spending saw only a modest increase of £3.2 billion.

UK government borrowing falls sharply to £11.6bn, beating forecastsGovernment borrowing falls sharply as national insurance hike boosts coffersSignificant fall in government borrowing in December, figures showUK government borrowing falls to £11.6bn in DecemberSignificant fall in government borrowing in December, figures showbut still one of the highest for the month since 1993Total UK government borrowing hits £140bn

For the financial year to December, total borrowing reached £140.4 billion, approximately £300 million lower than the same period in 2024. This amount represents 4.6% of GDP, a slight decrease from the previous year. Despite the monthly decline, December's borrowing figure remains the tenth highest recorded for that month since 1993, unadjusted for inflation.

but still one of the highest for the month since 1993

Chancellor Rachel Reeves emphasized the importance of reducing government borrowing, particularly as debt interest payments consume £1 in every £10 spent. She stated, “We are stabilising the economy, reducing borrowing, rooting out waste in the public sector and making sure that public services deliver value for taxpayers’ money.” Chief Secretary to the Treasury James Murray echoed this sentiment, highlighting that the government is on track to cut borrowing more than any other G7 country, with projections indicating it will be the lowest since before the pandemic.

Government borrowing falls sharply as national insurance hike boosts coffersUK government borrowing falls to £11.6bn in Decemberbut still one of the highest for the month since 1993Total UK government borrowing hits £140bnSignificant fall in government borrowing in December, figures showSignificant fall in government borrowing in December, figures show

Despite the positive outlook from government officials, some analysts have raised concerns about the pace of deficit reduction. Richard Hughes, former chair of the Office for Budget Responsibility, criticized the current fiscal rules as being among the most permissive in British history, suggesting they allow for a significant structural deficit. He noted, “The rules we have at the moment are providing the government the capacity to run a quite significant structural deficit,” which could hinder resilience against economic shocks.

Total UK government borrowing hits £140bnbut still one of the highest for the month since 1993UK government borrowing falls to £11.6bn in DecemberGovernment borrowing falls sharply as national insurance hike boosts coffersSignificant fall in government borrowing in December, figures show

Looking ahead, the government anticipates further improvements in public finances, with expectations of a continued decline in borrowing costs due to potential interest rate cuts. However, challenges remain, particularly regarding the need for fiscal discipline amidst rising public spending demands. The upcoming months will be crucial in determining whether the government can maintain its trajectory of reduced borrowing while addressing the needs of public services.

UK government borrowing falls to £11.6bn in December

• “Borrowing in December was substantially down on the same month in 2024, as a result of receipts being up strongly on last year whereas spending is only modestly higher.” — Tom Davies, Senior Statistician, ONS

UK government borrowing falls to £11.6bn in December

• “It cannot be right that £1 in every £10 we spend goes on debt interest – which could be better spent on our nurses, police officers and teachers – that’s why we’re tackling it.” — James Murray, Chief Secretary to the Treasury

Total UK government borrowing hits £140bn

• “ But she said the "big picture is that the pace of deficit reduction remains very slow".” — Ruth Gregory, Deputy Chief UK Economist, Capital Economics

Significant fall in government borrowing in December, figures show