PwC comments on Public Sector Finance data - November 2025

Commenting on the latest ONS public sector finance data, Nabil Taleb, economist at PwC UK, says:

“Public sector net borrowing totalled £17.4bn in October 2025, 1.7% less than in the same month last year but the third-highest October figure since records began. Financial year-to-date borrowing was £116.8bn, around 8.4% higher than in the same period a year ago and the second-highest April-October borrowing on record, surpassed only in 2020 during the peak of the Covid pandemic.

“Debt interest payments reached £8.4bn in October, £0.9bn less than a year ago. Debt interest costs are heavily influenced by the impact of Retail Prices Index (RPI) movements on lagged index-linked gilts. Higher debt servicing costs as a share of total revenues could leave the public finances more exposed to future economic shocks.

“This quarter’s weak growth figures and another relatively disappointing set of public finances underscore how constrained the fiscal landscape has become. Some indicators are improving, inflation appears to have passed its peak and interest rate cuts are edging closer, but as we head into the Budget, these positives are overshadowed by the wider fiscal reality. Downgraded growth forecasts and high debt interest costs mean the Chancellor’s fiscal headroom is all but exhausted.

“The key questions turn to how the Chancellor chooses to navigate these constraints: how much fiscal headroom she aims to rebuild, while honouring her commitments to have debt falling and not raise taxes on working people, and, crucially, what her long-term plan is to support public service and unlock economic growth. Falling interest rates will help the recovery, but fiscal credibility will hinge on setting out a plan that reassures markets and voters without undermining that emerging momentum.”