21 August 2026
If you are covering the latest public sector finances data, please see the following comment from Richard Carter, head of fixed interest research at Quilter Cheviot:
"In a week where gilt yields have once again marched higher and back above the symbolic 5% mark for 10 year bonds, the latest public sector finances data show borrowing for July was £1.8 billion, £0.7 billion or 68.7% more than the same time last year and £2.3 billion above the OBR’s forecast. Meanwhile, debt interest stood at £7.7 billion in July as capital uplift added £1.3 billion, largely reflecting the 0.2% increase in RPI between April and May.
"While a lot of the spending that Andy Burnham has already announced is just a reallocation of funds, the figures going forward will most certainly start to have his mark on them as he shapes the agenda of this government. He has already spoken vocally about wanting to find 'flexibility' within the fiscal rules, and bond markets are taking this as a sign that extra borrowing is to come.
"Negotiations between the US and Iran appear to have stalled, so the geopolitical volatility will continue to buffer the UK public finances for the foreseeable future. Jitters around US bond yields too are unlikely to be helping the situation either, giving markets somewhat of a trifecta of negative news that is going to tie the hands of the government as it seeks to make swift changes.
"This all comes as attention begins to focus on the upcoming Budget. With a rate rise this year from the Bank of England still likely, the government's fiscal position is going to remain challenged unless sustained economic growth can be found. For now, that has eluded multiple recent governments, and looks likely to be difficult to find for this one too."
