In December 2025, the UK government curtailed its borrowing to just £11.6 billion. These statistics are based on the most recent data published by the Office for National Statistics (ONS). This is a huge £7.1 billion (38%) reduction on last year’s figure for the same month. The most recent data has the government collecting £7.7 billion more in taxes this December vs. last December of 2024 compared to 2023. Meanwhile, tax revenue poured in as well—up 8.9% yearly.
For the financial year to December, the total public sector borrowing amounted to £140.4 billion. This is an incredible £300 million less than what we experienced in the equivalent period in 2024. This decrease indicates a continued positive trend in the state’s public finances. The amount borrowed in December 2025 came in as the tenth highest ever for the month since records began back in 1993.
Ruth Gregory, deputy chief UK economist at Capital Economics, noted that UK public finances are “finally showing signs of improvement in recent months.” This assessment aligns with observations from Tom Davies, Deputy Director for the ONS public service division, who attributed the decline in government borrowing to “receipts being up strongly on last year whereas spending is only modestly higher.”
The ONS now reported that nominal government spending in December 2025 was barely higher than one year earlier. This modest uptick in spending, along with a robust increase in tax revenue, has driven the decrease in borrowing.
Overall, even with this great news, UK government borrowing in December 2025 was still £10.4 billion higher than in December 2023. That year, borrowing reached just over £8.1 billion. Even more remarkable are the actual figures given that economists had warned for months that borrowing would be much higher this December.
Going forward Tom Davies was hopeful of further progress come January. To top it off, all indications are that even greater improvement is coming in January. Those numbers are sure to show a huge jump in self-assessment tax and capital gains tax (CGT) receipts. This new surge is a result of the freeze on income tax thresholds and the sale of state assets, motivated by the speculation that Reeves would raise CGT rates.
Government Environmental chief James Murray highlighted the necessity to remedy and stabilize a shaken economy. Beyond tax reform, he continues to call for reducing the nation’s borrowing and addressing waste in the federal bureaucracy. He remarked on last year’s progress, stating, “Last year we doubled our headroom and we are forecast to cut borrowing more than any other G7 country with borrowing set to be the lowest this year since before the pandemic.”