PwC comments on Public Sector Finance data for August 2025

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

“Public sector net borrowing totalled £18.0bn in August 2025, £3.5bn more than in the same month last year and the second-highest August figure since records began, surpassed only by the deficit in August 2020 during the peak of the Covid pandemic. Financial year-to-date borrowing was around 24% higher than in the same period a year ago and 16% more than the OBR forecast. 

“Debt interest payments reached £8.4bn in August, £1.8bn more than in August 2024. Higher debt servicing costs as a share of total revenues will leave the public finances more exposed to future economic shocks. 

“Months of high borrowing and the political challenge of cutting spending have all but wiped out the Chancellor’s headroom. Gilt yields, the effective cost of financing government debt, have also surged this month to their highest level in decades. Broader economic conditions are offering little relief. Sticky inflation is delaying rate cuts, growth remains too weak to ease the debt burden, and the OBR is poised to downgrade its forecasts, further darkening the outlook. The Chancellor faces tough choices, and the test will be whether she can make them palatable to voters and markets.”