UK borrowing hits second-highest May level on record at £23.3bn

UK borrowing surged to £23.3 billion in May, the second-highest figure ever recorded for the month and a sharp warning that the government’s finances are running hotter than the Office for Budget Responsibility expected. The overshoot was driven by a jump in debt interest, higher spending on public services and benefits, and tax receipts that failed to keep pace.

The latest figures from the Office for National Statistics showed public sector net borrowing was £5.4 billion higher than in May 2025 and £5.6 billion above the £17.7 billion forecast by the OBR. Central government debt interest payable alone reached £11.7 billion, up £4.1 billion from a year earlier and the highest May reading on record.

For Chancellor Rachel Reeves, the numbers narrow the room for manoeuvre. Higher borrowing means less flexibility for tax cuts, new spending commitments or other giveaways, especially while financing conditions remain tight and interest rates remain elevated. The ONS said spending on debt interest, public services, investment and benefits all increased in May 2026, more than offsetting higher tax receipts.

The strain is showing in the year-to-date numbers as well. Borrowing in the financial year to May reached £46.3 billion, which was £8.9 billion higher than the same point in 2025 and £7.7 billion above the OBR’s £38.6 billion forecast. The current budget deficit, which measures borrowing to fund day-to-day spending, stood at £18.5 billion in May and totalled £34.5 billion for the financial year to date, £6.0 billion above forecast.

Public sector net debt rose to 95.1% of GDP at the end of May, a level last seen in the early 1960s. The ONS said the figures were first estimates and will be revised over coming months, but the direction of travel is already clear: debt servicing is absorbing more of the budget, leaving less capacity elsewhere.

One recent factor in the fiscal backdrop has been the Labour government’s employer National Insurance increase introduced in April 2025, which lifted receipts but also pushed up wage costs for firms. PwC UK has warned that higher borrowing, combined with inflation risks and elevated rates, could keep borrowing costs higher for longer.