UK budget deficit undershoots official expectations
Britain’s government borrowed less over the first two months of the 2025/26 financial year than official budget forecasters had expected, helped by an influx of taxes paid by businesses after a recent hike in social security contributions.
Official data today showed public sector borrowing for May stood at £17.686 billion.
While a Reuters poll of economists showed a median forecast of £17.1 billion, the government has borrowed £37.7 billion over the first two months of 2025/26 – less than the £40.7 billion the Office for Budget Responsibility had predicted.
Today’s figures from the Office for National Statistics provided an early indication of the impact of a significant increase in employer social security payments – known in Britain as National Insurance contributions (NICs) – which took effect in April and are paid a month in arrears.
A major source of funding for the Labour government’s spending plans, the ONS said compulsory social security contributions in April and May combined were £30.2 billion – a little less than the Office for Budget Responsibility predicted but still a record in cash terms.
Compared with the same time in 2024, social security contributions were up 17.5% – the biggest such rise in three years.
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