In December 2025, the central government in the UK borrowed £11.6 billion. This represented a big drop from the £18.7 billion the government borrowed in 2021/22. The overall fiscal picture is looking better, with a £7.1 billion (38%) reduction. This is still short of £8.1 billion recorded in December 2023. The December borrowing surges to £27 billion according to the latest ONS (Office for National Statistics) figures. It’s the tenth highest for that month since records started in 1993.
Borrowing, outgoing UK Chancellor Jeremy Hunt confirmed in his autumn statement, was £140.4 billion in the financial year ending in December. It’s more than £300 million down compared to the same period in 2024. The government took in £7.7 billion more in taxes in December 2025 compared to December 2024. This 54% jump in tax receipts lies at the crux of the ongoing financial turnaround. This represents an 8.9% rise year-on-year.
Ruth Gregory, deputy chief UK economist at Capital Economics, remarked on the positive trend, stating that public finances were “finally showing signs of improvement in recent months.” She mentioned that we should see a major improvement again in January. We’re expecting sizeable self-assessment tax receipts, capital gains tax receipts.
Tom Davies, Deputy Director for the ONS public service division, pointed the fall in borrowing due to strong revenue growth. He explained, “receipts being up strongly on last year whereas spending is only modestly higher.” This is a welcome development, reflecting a strong commitment to restoring balance to the public finances.
The actual results are all the more remarkable given that economists had expected a much larger borrowing figure. This sharp reduction in new borrowing is consistent with the Administration and Congressional Republicans’ focus on stabilizing the economy and reducing over-borrowing and over-debt. James Murray, a representative of the Treasury, emphasized these efforts by 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.”
Similar to the positive results the UK government’s fiscal strategy is displaying. In large part, it succeeds with the daunting task of charting an economic recovery from the wake of the pandemic. With revenues still surging and spending commitments relatively slow-growing, analysts are hopeful that borrowing will continue to decline.