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UK government borrowing falls in June

July 21, 2026 adminsr

The UK government borrowed slightly less than expected in June, according to official figures published as new prime minister Andy Burnham began setting out measures to cut living costs for households.

Borrowing – the difference between spending and income from taxes – was £16bn last month, £7.9bn lower than June last year, the Office for National Statistics (ONS) said.

Separate figures also showed the unemployment rate was unchanged between March and May, with the ONS saying the labour market was “relatively steady”.

However while the borrowing figures were better than forecast the ONS said total debt remained near £3 trillion, which is close to the annual value of the entire UK economy.

Borrowing for June was slightly below the £16.3bn that had been predicted by the government’s official forecaster, the Office for Budget Responsibility (OBR).

Ruth Gregory, deputy chief UK economist at Capital Economics, said June’s slightly lower than expected borrowing figure was “a rare piece of good news” for the new prime minister and his new chancellor John Healey.

However, she added: “Overall, there’s no escaping the fact that the public finances are fragile and that there is limited scope for extra borrowing.”

So far in the current financial year, borrowing has reached a total of £57.6bn. While this is down £3.7bn from the same period last year, it is £2.7bn above the OBR’s forecast.

Burnham and Healey have both pledged to stick to former chancellor Rachel Reeves’ fiscal rules on spending and borrowing.

Although the new prime minister said on Monday he would use “any flexibility within them” to help with policy changes.

Meanwhile, the latest survey of the labour market showed the unemployment rate remained unchanged at 4.9%.

Growth in regular earnings – which excludes bonuses – remained unchanged, rising at an annual pace of 3.4% in the March to may period.

However, the ONS noted that regular wage growth in the private sector fell below 3% for the first time since 2020.

Gregory said the latest data suggested the labour market was “still weak”, and as a result the Bank of England was likely to keep interest rates on hold at 3.75% when it meets next week.