UK's national debt edged closer to the £3TRILLION mark last month

UK's national debt edged closer to the £3TRILLION mark last month A boost from self assessed tax receipts boosted the Treasury's coffers last month but Chancellor John Healey faces tough choices in the autumn Budget The UK's national debt remained just below the £3trillion mark last month, figures from the Office for National Statistics have revealed. Public sector net debt was provisionally estimated at £2,984.9billion at the end of July, almost £96billion more than a year earlier. However, debt as a percentage of the economy stood at 94.1%, or 0.8 percentage points lower than a year ago. Economists have been watching for when the national debt - the amount built up over time - may breach the symbolic £3trillion mark. While high, it comes as it was confirmed on Wednesday that the US national debt had hit the $40trillion level. It came in mixed data for Chancellor John Healey as he prepared for the autumn Budget at the end of October. Mr Healey said: “Fiscal discipline is the bedrock of our UK economic stability and national security which is why we are committed to meeting our fiscal rules, with a buffer against global uncertainties. We are cutting the deficit faster than any other G7 economy, while giving people a bit of breathing space with cost of living pressures and focusing support to get young people into work.” Borrowing – the difference what the government spends and gets in from taxes – was £1.8billion in July 2026, which was £700million more than in July 2025, and £2.3billion above the Office for Budget Responsibility's forecast. But borrowing in the financial year to date was £56.7billion, £6billion lower than the same period a year ago. July traditionally delivers a boost to the Treasury from self-assessment tax payments, along with January. The ONS said self-assessed income tax receipts totalled a record £17.1billion in last month, and £1.7billion more than in July 2025. ONS chief economist Grant Fitzner said: “Public sector borrowing was lower in the financial year to date than in the same period last year, both in total and as a share of the economy. However, it is above the OBR spring forecast. “Conversely, borrowing was slightly higher this month than in July last year, with spending growth outpacing higher receipts, including from self-assessed taxes which often feed in more strongly in July.” The ONS data showed the Treasury collected £18.5billion VAT last month, which was £1billion more than a year ago despite the launch of the government's Great British Summer Savings scheme which has seen VAT temporarily lowered from 20% to 5% at places such as theme parks and kids' meals until September 1. Government borrowing continues to come at a cost, with interest payments swallowing up £7.7billion last month alone, and almost 10% more than a year ago. Jake Finney, senior economist at PwC UK, said: "Attention will soon turn to the autumn Budget, when we will get more clarity on the government’s fiscal plans. The Prime Minister may have changed, but the fiscal arithmetic has not. The same difficult trade-offs remain, including the unresolved question of how to pay for higher defence spending. “Financial markets have so far been relatively calm about the change in leadership. While there have been some additional spending commitments in recent weeks, these have been small compared with the wider fiscal challenges. However, as we have seen in recent years, markets can become jittery when uncertainty over the public finances rises in the run-up to a Budget.” Danni Hewson, head of financial analysis at AJ Bell, said: “If the new Chancellor needed any reminder of the tight rope he will have to walk when he steps up to the dispatch box at the end of October, today’s borrowing figures delivered that in spades. “Despite self-assessment tax receipts hitting a record high for the month, borrowing shot up by a surprising 68.7% in July, compared to the same month last year, as the government continued to spend more than it brings in. “July is often the month when the government books a tidy surplus and that’s what economists and the OBR had expected. Despite the increased take from VAT, Corporation Tax, NI contributions and Income Tax, pressures including increased benefit spend and debt interest costs gobbled away all the extra cash and a bit more." Elliott Christensen, senior economist at think tank the Resolution Foundation, said: “Stronger growth in the first half of the year contributed to strong tax receipts in July. But it has failed to deliver a wider public finances windfall as the economic impact of conflict in the Middle East has taken its toll on borrowing costs. “The Chancellor’s margin against his fiscal rules is now razor thin, with the healthy headroom of around £24billion last spring likely to have fallen below £8billion. He should use his first Budget to put the public finances on a firmer footing and ensure that any new policy announcements are fully funded.”