UK Government borrowing fell sharply in December, driven by stronger tax receipts that more than offset higher public spending, according to new figures from the Office for National Statistics (ONS).
Borrowing, defined as the gap between public spending and tax income, totalled £11.6 billion in December. This was £7.1bn lower than in the same month last year, a 38% fall, and below most economists’ expectations. However, it remained higher than December 2023, when borrowing stood at £8.1bn.
The ONS said the improvement reflected a substantial rise in receipts, while spending increased only modestly. Despite the annual fall, December 2025 still recorded the tenth-highest level of borrowing for the month since records began in 1993, without adjusting for inflation.
Tax receipts in December were £7.7bn higher than a year earlier, an increase of 8.9%. This was driven by rises in income tax, corporation tax, VAT and National Insurance contributions, following changes to employer NIC rates introduced in April.
Provisional data shows that borrowing for the financial year to December reached £140.4bn, around £300m lower than the same period last year. This equates to 4.6% of GDP, down 0.2 percentage points year on year, but still the third-highest April-to-December figure on record, behind 2020 and 2024.
James Murray, Chief Secretary to the Treasury, said the Government was stabilising the economy, reducing borrowing and cutting waste across the public sector.
Ruth Gregory, deputy chief UK economist at Capital Economics, said the public finances were showing early signs of improvement, but warned that overall deficit reduction remained slow.
Talk to us about your finances.
