In December 2025, the UK government ran up £11.6 billion in new debt. This figure is a big drop of £7.1 billion (38%) in cash terms compared to the same month last year. These numbers were released by the UK’s Office for National Statistics (ONS). They amplify a positive trend of better public finances for the UK government in recent months. This is still a very large figure for borrowing given it’s December, coming in as the tenth highest December figure since records started in 1993.
The UK government borrowed £8.1 billion in December 2023. In the financial year to December 2025, the government borrowed an eye-watering £140.4 billion. This figure is nearly £300 million greater than the net amount it borrowed in the equivalent period of 2024.
Tax receipts were a major driver in this drop in borrowing. This means the UK government is taking in £7.7 billion extra in taxes than in Dec 2024. This uptick amounts to a remarkable 8.9% boost in tax revenue. Tom Davies, Deputy Director for the ONS public service division, provided some context by explaining that the big jump in receipts compared to last year is why borrowing had fallen so much. At the same time, spending has barely increased at all.
The new UK fiscal numbers show the government is experiencing an unexpected turnaround in the public finances. Ruth Gregory, deputy chief UK economist at Capital Economics, noted that the figures are “finally showing signs of improvement in recent months.” She predicted that January would usher in even more improvements. Such improvements will be underpinned by a predicted windfall in self-assessment tax and capital gains tax (CGT) receipts.
“What’s more, a further improvement in January is on the way. Those figures will probably show a bumper set of self-assessment tax and capital gains tax receipts reflecting the freeze on income tax thresholds and a disposal of assets due to the speculation that Reeves would raise CGT.” – Ruth Gregory
In response to these cuts, James Murray, the UK government’s spokesperson for the Treasury, said that the UK administration was focused on economic stability and fiscal discipline. He stated that their focus on “stabilising the economy, reducing borrowing, [and] rooting out waste in the public sector” is beginning to yield results. Government’s fiscal resolve Murray touted the government’s commitment to slash borrowing more than any other G7 country. He predicted that this year’s borrowing would reach its lowest level since long before the pandemic.
Even with these all-positive indications, there is a continuing prudent pessimism about the government’s fiscal outlook going forward. A decrease in borrowing could instead be a positive sign of improving fiscal health. Dangers remain amid our new and rapidly-shifting economic reality.