22 September 2026
If you are covering the latest public sector finances data, please see the following comment from Jonathan Raymond, investment manager at Quilter Cheviot:
“Just over a month before the Chancellor delivers his first Budget, the latest public sector finances data show borrowing in August reached £18.3 billion, £2.9 billion (19%) higher than the same month last year. Borrowing also came in £3.5 billion above the Office for Budget Responsibility’s forecast, underlining the pressure on the public finances.
“Debt interest spending, meanwhile, totalled £8.8 billion in August – the highest August figure since monthly records began in 1997. Of this, £2.1 billion reflected capital uplift, largely driven the 0.3% increase in RPI between May and June.
“While oil prices have fallen back towards $100 a barrel and bond yields have eased in the last few days, the outlook for the public finances remains challenging. With the Federal Reserve having raised interest rates and the Bank of England still expected to tighten policy further, borrowing costs are likely to remain elevated. Any further increase would add to the economic pressures facing both households and the Treasury ahead of the Budget.
“Much of the spending announced so far by Andy Burnham has amounted to a reallocation of existing funding rather than significant new expenditure. However, next month’s Budget and his 10-year plan should provide a clearer indication of his longer-term priorities. Borrowing is already running at a high level, and his apparent willingness to explore greater flexibility within the fiscal rules suggests there could be more to come, which would put further pressure on government borrowing costs.
“The government’s fiscal position remains stretched and is likely to stay that way unless economic growth improves meaningfully. As attention increasingly turns to the Budget, markets will be watching closely for any indication of how the government intends to balance its spending ambitions with fiscal credibility, with markets unlikely to provide the Chancellor with any benefit of the doubt.”
