UK borrowing is below last year's pace but £8.1bn above forecast, with benefits the biggest spending rise
Five months into the financial year, the government has borrowed £2.2bn less than a year ago but £8.1bn more than the Office for Budget Responsibility expected. Higher benefits, not debt interest, account for the largest part of the extra spending.
Noodle News data desk · reading time ~3 min
£8.1bn
Borrowing above the OBR forecast, April to August 2026
£77.3bn
Borrowed in April to August 2026, £2.2bn less than a year earlier
£9.7bn
Rise in net social benefits spending, the largest of any category
What the data shows
Better than last year, worse than planned
The Office for National Statistics (ONS) reports that the public sector borrowed £77.3bn in the financial year to August 2026. That is £2.2bn (2.7%) less than in the same months of 2025, and 2.5% of GDP, but £8.1bn above the forecast the OBR published in March.1 August on its own was worse: borrowing of £18.3bn was £2.9bn higher than a year earlier, £3.5bn above forecast and the second-highest August on record, behind only 2020.1
Exhibit 01
Public sector net borrowing, April to August: last year, this year and forecast
Source: ONS, Public sector finances, UK: August 2026. The forecast bar is the 2026 outturn less the published gap to the OBR forecast (77.3 − 8.1 = 69.2), calculated by Noodle News. Zero-based axis.1
The shortfall against forecast is not a failure of tax receipts to grow. Central government receipts were £23.6bn (5.4%) higher than a year earlier, led by income-related taxes, up 6.6%, and Corporation Tax, up 10.4%. Total central government spending rose slightly more, by £25.6bn (4.9%).1
Where the money went
Benefits, not interest, led the increase
Net social benefits rose £9.7bn (7.2%) to £145.0bn, the largest single increase and more than a third of the total. Spending on goods and services, which includes pay and the cost of running public services, rose £7.1bn (3.7%). Net investment rose £4.2bn (11.5%). Debt interest rose only £0.7bn (1.5%) to £50.0bn.1
Exhibit 02
Rise in central government spending by category, April to August 2026 against a year earlier
Source: ONS, Public sector finances, UK: August 2026, Table 7. Total published rise: £25.6bn; the categories sum to £25.5bn because of rounding. Zero-based axis.1
Key finding. Debt interest, often the focus of fiscal debate, was the smallest of the large movers. The ONS notes that much of the growth in benefit spending comes from inflation-linked uprating and earnings-linked State Pension rises, so this is largely a price effect, not new entitlements.1
What we don't know
Central government spending figures for the latest month are provisional, and the ONS warns that each September's annual data updates can revise figures well back in time. Debt interest swings with the Retail Prices Index: August's £8.8bn was the highest August since records began in 1997, but lower than each of the first three months of this year, so five-month totals matter more than a single month. The next release is due on 21 October.1
Caveat. The forecast gap is measured against the OBR's March 2026 monthly profile, and monthly profiles are less reliable than full-year forecasts: timing differences in tax and spending can shrink or widen the gap without changing the year's total. A gap of £8.1bn after five months does not by itself mean the year will end that far above forecast.1
Method. All figures for borrowing, receipts and spending are transcribed from the ONS bulletin (Tables 1 to 7) for the financial year to August, April to August. Rises by category are the 2026 value less the 2025 value as published; percentages are the ONS-published percentages. The OBR forecast bar is derived as the 2026 outturn less the ONS-published gap to the OBR’s March 2026 forecast, so it carries rounding of up to £0.1bn. Rounding means the seven spending categories sum to £25.5bn against the published £25.6bn. Figures are nominal and unadjusted for inflation. No projections are used. The calculations were run in code and checked against the published totals.