UK government borrowing had the largest monthly decrease since records began, with December 2025 seeing it crashed to just £11.6 billion. That marks a £7.1 billion fall, or 38% down, versus last December when borrowing was £18.7 billion. The reduction in borrowing is attributed to a surge in tax income, which outpaced government spending during the same period.
The Office for National Statistics (ONS) only released the most recent 2020 numbers last week. This demonstrates that the UK government received £7.7 billion in additional tax revenues in December 2025 than December 2024. This increase represents an 8.9% increase in tax revenues, a major factor in the reduced borrowing levels. Borrowing is still higher than the £8.1 billion level seen in December 2022.
Borrowing for the financial year up to December is £140.4 billion. This is some £300 million less than the total borrowed during the same period last year. Tom Davies, Deputy Director for the ONS public service division, emphasized the importance of these figures, stating that “receipts being up strongly on last year whereas spending is only modestly higher.”
Recent figures seem to confirm that UK public finances are starting to find their feet again, as most economic commentators are cautiously hopeful about the return of positive numbers. Ruth Gregory, Deputy Chief UK Economist at Capital Economics, noted that public finances are “finally showing signs of improvement in recent months.” She cautioned that January’s numbers need to reflect additional job growth. This is because of forecasted boosts in self-assessment tax and capital gains tax receipts.
The cut in new borrowing matches the government’s overall fiscal plans. James Murray, Labour’s Shadow Chief Secretary to the Treasury, remarked on the government’s commitment to “stabilising the economy, reducing borrowing, rooting out waste in the public sector.” He pointed out that truthfully last year the government sidestepped its headroom doubling. This step coincides with it projecting a decline in borrowing that’s bigger than any other G7 nation, with projections indicating it will be the lowest since before the pandemic.
Despite the positive indicators, it is essential to recognize that the December 2025 borrowing figure remains among the highest recorded for that month since records began in 1993. The federal government will need to be vigilant of economic circumstances as it finds the appropriate path on fiscal policy and reacts to persistent shocks.