UK Government Borrowing in October Higher Than Expected

Published: 21 November 2025 Friday. The English Chronicle Desk. The English Chronicle Online

The UK government’s borrowing for October 2025 was higher than expected, according to the latest figures from the Office for National Statistics (ONS). Government borrowing—the difference between public spending and tax revenue—totalled £17.4bn last month. While this is down from £19.2bn in October 2024, it still represents the third-highest October borrowing figure on record in cash terms.

The figures come just days before Chancellor Rachel Reeves is set to unveil her Budget on 26 November. She has previously confirmed that both tax increases and spending cuts are under consideration to bring public finances under control.

ONS chief economist Grant Fitzner highlighted that although borrowing was £1.8bn lower than in the same month last year, “spending on public services and benefits were both up on October last year, but this was more than offset by increased receipts from taxes and National Insurance contributions.” Analysts had expected borrowing to be around £15bn, slightly above the Office for Budget Responsibility’s (OBR) March forecast of £14.4bn.

In the financial year to October, cumulative borrowing reached £116.8bn, £9bn more than the same period in 2024. This makes it the second-highest borrowing for the April-to-October period since records began in 1993, after 2020 during the pandemic.

Chief Secretary to the Treasury James Murray emphasised the government’s goal to reduce borrowing over the course of the parliamentary term. “Currently, £1 of every £10 in taxpayer money is spent on paying interest on national debt,” he said. “That money should be going to our schools, hospitals, police, and armed forces. That is why we are set to deliver the largest primary deficit reduction in both the G7 and G20 over the next five years—to get borrowing costs down.”

Shadow Chancellor Sir Mel Stride warned that borrowing so far this financial year is the highest outside the pandemic. “If Labour had any backbone, they would control spending to avoid tax rises next week,” he said, criticising the government’s approach ahead of the Budget.

James Smith, an analyst at investment bank ING, noted that while the borrowing figures are higher than expected, they reflect short-term pressures rather than the Chancellor’s long-term fiscal framework. “Today’s data shows that the government is borrowing more than expected, but it doesn’t necessarily change the decisions she will make in next week’s Budget,” he said.

Nick Ridpath, research economist at the Institute for Fiscal Studies, highlighted that government borrowing for the year to date has exceeded OBR forecasts by around £10bn. He cautioned that, while individual monthly figures should not be overemphasised, they do underline the uncertainty around future spending and tax revenues, as well as the “stubbornly high costs of servicing government debt.”

Chancellor Reeves faces a challenge to fill a gap in public finances estimated at £20bn, according to newer OBR assessments. Her fiscal rules for the Budget, described as “non-negotiable,” include not borrowing to fund day-to-day public spending by the end of the parliamentary term and ensuring government debt falls as a share of national income. Operating with minimal fiscal margin for error could prompt additional measures to increase “fiscal headroom.”

Separate ONS data revealed that UK retail sales fell by 1.1% in October, marking the first monthly drop since May. “Supermarkets, clothing stores, and online retailers all saw slower sales, with some retailers reporting that consumers were waiting for November’s Black Friday deals,” Fitzner said.

Ruth Gregory, deputy chief UK economist at Capital Economics, described the combination of higher borrowing and falling retail sales as “a pretty grim picture” of the economy. She noted that while the retail sales drop comes after four consecutive months of growth and is therefore not catastrophic, declining consumer confidence indicates that households are becoming more cautious in their spending.

The data highlights the difficult balancing act for the government: addressing immediate public service needs, controlling debt, and managing the economy in the face of weaker consumer spending. The Treasury must also consider rising interest costs, which consume a growing share of taxpayer money and constrain public expenditure on essential services.

Economists suggest that the Budget could include a combination of tax changes, spending adjustments, and targeted support measures for households. The government may also seek to stimulate confidence in consumer spending while maintaining fiscal discipline to adhere to its long-term deficit and debt targets.

Looking ahead, the borrowing figures underscore the importance of carefully monitoring economic trends, including consumer behaviour, tax receipts, and spending pressures. They also reflect the lingering effects of high debt levels accumulated during the pandemic and subsequent economic challenges, emphasising the need for both short-term and long-term policy solutions.

In conclusion, the higher-than-expected borrowing for October adds pressure on Chancellor Reeves as she prepares the upcoming Budget. The government faces the dual challenge of controlling public finances while supporting economic growth, stabilising consumer confidence, and keeping borrowing costs manageable for the future.