Macro
UK public debt passes £3 trillion for the first time as September borrowing overshoots forecast
Borrowing of £24.5 billion beat the OBR's projection by £1.9 billion, with debt interest swollen by inflation-linked gilt payments.
HedgeWeekly News Desk ·
Britain's public sector net debt reached £3,005.0 billion at the end of September, the first time it has topped £3 trillion, the Office for National Statistics said on Wednesday. The provisional figure is £91.7 billion higher than a year earlier and equals 94.0% of GDP, which is 0.7 percentage points lower than a year ago and 1.2 points below the Office for Budget Responsibility's forecast.
The government borrowed £24.5 billion in September, £1.8 billion more than in the same month of 2025 and £1.9 billion above the OBR's projection. MT Newswires noted the result was also above the £23.8 billion economists had expected. Central government receipts rose 5.2% to £90.1 billion, while current spending grew faster, up 7.0% to £98.6 billion.
Debt interest was the standout. Central government paid £10.9 billion in the month, up 16.6% on a year earlier and £2.0 billion more than forecast, and £4.0 billion of that came from the RPI-linked uplift on index-linked gilts. For the financial year to date, borrowing totals £97.8 billion: £4.4 billion less than a year ago, but £6.0 billion above the OBR's path. The ONS also revised August's year-to-date borrowing down by £4.0 billion, mainly because tax receipts came in higher.
Why it matters: the data landed on the same morning that UK CPI rose to 3.5% in September, and the two are linked through the index-linked gilt market, where higher inflation feeds straight into the Treasury's interest bill. Macquarie strategists said overnight index swaps price about a 95% chance of a Bank of England rate rise on 5 November. For gilt investors, a borrowing overshoot that is running £6.0 billion ahead of forecast, driven by debt service, narrows the fiscal room and is the figure to track into the government's next fiscal statement and the OBR's updated forecasts.