Overview

• ONS data show July public sector net borrowing at £1.1bn, the lowest July in three years and below both City expectations (~£2.6bn) and the OBR’s £2.1bn forecast.
• Stronger receipts drove the undershoot, with self-assessed income tax rising to £15.5bn (up £2.7bn year on year) and higher national insurance contributions lifting overall revenues.
• Despite the monthly improvement, April–July borrowing totals about £60bn, roughly £6.7bn higher than the same period in 2024 and among the highest on record for that span.
• Public sector net debt stands near 96.1% of GDP, with £7.1bn paid in interest in July and long-dated gilt yields hovering at multi-decade highs, squeezing fiscal space.
• Economists warn a sizable fiscal gap—often estimated in the £40bn–£51bn range—still looms ahead of the autumn budget, with reported options including property and wealth tax changes as headline income tax, employees’ NI and VAT rises have been ruled out.