June's data revealed public borrowing of £20.7 billion, notably higher than the £17.2 billion anticipated by the Office for Budget Responsibility, marking significant budget pressures. The deficit for the month was £16.3 billion, increased by £7.1 billion compared to June 2024. The primary driver behind this rise was unexpected surges in interest payments on government bonds, largely influenced by inflation. Despite this, the total borrowing for the first quarter aligned with the OBR’s forecast, providing some relief as MPs approach the summer recess and fiscal planning continues ahead.
Public borrowing jumped to £20.7 billion last month, making it the second highest figure for any June on record, aside from the Covid-hit year of 2020.
The current deficit for June was £16.3 billion, which is £7.1 billion more than the same month in 2024, highlighting a significant overshoot.
The overshoot is attributed to higher-than-expected interest costs on government bonds, which have risen due to inflation hitting 4.4% on the RPI measure.
Despite the bad news in June, the first three months of the new financial year showed borrowing in line with the Office for Budget Responsibility's forecasts.
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