PwC comments on Public Sector Finance data - October 2025

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

“Public sector net borrowing totalled £20.2bn in September 2025, 8.6% more than in the same month last year and the second-highest September figure since records began, surpassed only by the deficit in September 2020 during the peak of the Covid pandemic. 

“Debt interest payments reached £9.7bn in September, £3.9bn more than a year ago. The interest payable on central government debt was higher than any previous September on record. Higher debt servicing costs as a share of total revenues will leave the public finances more exposed to future economic shocks.

“The Chancellor faces an increasingly difficult balancing act ahead of the Autumn Budget, with her fiscal headroom all but exhausted by a mix of weaker growth prospects, higher borrowing costs and rising spending pressures. An expected downgrade to the OBR’s long-term growth forecasts will only add to the squeeze. Despite ruling out another £40 billion tax grab, fresh tax rises and spending cuts now look unavoidable as she tries to rebuild her £10 billion buffer. The IFS estimates she’ll need to find around £22 billion to do so.

“A confident Budget may steady markets and lift consumer sentiment, but the UK’s real challenge is raising productivity. The IMF expects the UK to be the second-fastest growing G7 economy this year, yet much of that growth comes from higher labour participation rather than genuine productivity gains. Until the UK starts adding more value, weak per-capita growth and mounting fiscal pressures will continue to persist.”