The government borrowed the least amount of money in three years last month, official figures showed, in a surprise bout of good news for the Chancellor Rachel Reeves.
Not since July 2021, in the midst of the COVID-19 pandemic, was state borrowing so low, according to data from the Office for National Statistics (ONS).
Increases in tax and national insurance receipts meant public sector net borrowing was £1.1bn in July, meaning there was a £1.1bn gap between government spending and income.
That borrowing is less than half the figure (£2.6bn) expected by economists polled by the Reuters news agency.
But borrowing was still £6bn higher in the first four months of the financial year, which started in April, than the same period in 2024.
Despite a £2.3bn drop in monthly borrowing, when July 2025 is compared to July 2024, the state still spent more on the cost of that lending.
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The amount of interest paid on government debt was £7.1bn, £200m more than a year earlier.
Responding to the figures, Ms Reeves’s deputy, chief secretary to the Treasury, Darren Jones, said:
“Far too much taxpayer money is spent on interest payments for the longstanding national debt.
“That’s why we’re driving down government borrowing over the course of the parliament – so working people don’t have to foot the bill and we can invest in better schools, hospitals, and services for working families.”
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