Public Sector Net Borrowing Soars

25th April 2023

Revisions
Public sector finances data
Glossary
Measuring the data
Strengths and limitations
Related links
Cite this statistical bulletin
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1.Main points
Public sector net borrowing (PSNB ex) in March 2023 was £21.5 billion, £16.3 billion more than in March 2022, and the second-highest March borrowing since monthly records began in 1993.

PSNB ex in the financial year ending (FYE) March 2023 was initially estimated at £139.2 billion (or 5.5% of gross domestic product (GDP)), £18.1 billion more than in the FYE March 2022 and the fourth-highest FY borrowing since records began in 1946.

PSNB ex in the FYE March 2023 was £13.2 billion less than forecast by the Office for Budget Responsibility (OBR); however, these are not final figures, and they will be revised over the coming months as we replace our initial estimates with provisional and then final outturn data.

Public sector current budget deficit (PSCB ex) in the FYE March 2023 was initially estimated at £87.4 billion (or 3.5 % of GDP), £15.8 billion more than in the FYE March 2022 and the sixth-highest FY budget deficit since records began in 1946.

Public sector net debt (PSND ex) at the end of March 2023 was £2,530.4 billion or around 99.6% of GDP, with the debt-to-GDP ratio at levels last seen in the early 1960s.

PSND ex excluding the Bank of England was £2,246.9 billion or around 88.5% of GDP, which was £283.5 billion lower than the wider measure.

Our estimate of UK public sector net worth (PSNW ex), published for the first time this month, was a deficit of £605.8 billion at the end of March 2023.

Central government net cash requirement (excluding UK Asset Resolution Ltd and Network Rail) was £25.1 billion in March 2023, bringing the total for the FYE March 2023 to £111.3 billion, £4.1 billion less than forecast by OBR.

Borrowing in March 2023
Initial estimates for March 2023 show that the public sector spent more than it received in taxes and other income, requiring it to borrow £21.5 billion.

Public sector receipts were £88.8 billion, £2.0 billion (2.3%) more than in March 2022, though this rise in income was insufficient to offset the £18.3 billion (19.9%) rise in total public sector spending, which reached £110.3 billion in March 2023.

Central government forms the largest part of the public sector and the relationship between its receipts and expenditure is the main determinant of public sector borrowing.

In March 2023 central government received £81.0 billion in taxes and other income, £1.6 billion (2.0%) more than in March 2022. However, over the same period spending increased by £15.1 billion (16.8%) to £104.7 billion, in part reflecting the cost of the combined energy support schemes provided to households and businesses in March 2023, initially estimated at around £8.0 billion.

As a result, central government borrowed £23.7 billion in March 2023, more than double the £10.2 billion borrowed in March 2022.

Borrowing in financial year ending March 2023
The £21.5 billion borrowed in March 2023 combined with a reduction of £14.6 billion to our previously published financial year-to-February borrowing estimate brings the total borrowed in the financial year ending (FYE) 2023 to £139.2 billion.

This was £18.1 billion more borrowing than in the FYE 2022 and the fourth-highest FYE borrowing since monthly records began, behind FYE 2021 (during the coronavirus (COVID-19) pandemic) and both the FYE 2010 and FYE 2011 (after the effects of the global financial downturn).

Public sector borrowing consists of two broad components: the current budget deficit and its capital expenditure (or net investment).

In the FYE 2023, the public sector current budget deficit (or borrowing to fund its day-to-day activities) was £87.4 billion (or 3.5% of GDP). This was £15.8 billion (or 0.4% of GDP) more than in FYE 2022, with the steady rise in receipts not enough to offset the £34.0 billion increase in interest payable on the government's debt and the initally estimated £41.2 billion cost of the combined energy support schemes and other one-off costs.

Over the same period, public sector net investment was £51.8 billion (or 2.1% of GDP), £2.4 billion more (unchanged as a percentage of GDP) than in FYE 2022, with a combination of several smaller changes partially offset by a £10.0 billion upward revaluation of the student loans portfolio.

Central government forms the largest part of the public sector and the relationship between its receipts and expenditure is the main determinant of public sector borrowing.

Central government receipts
Total central government receipts were £929.0 billion in the FYE 2023, an increase of £88.0 billion (10.5%) compared with FYE 2022.

Of these, tax receipts increased by £67.3 billion (10.7%) to £696.0 billion with growth strong in Value Added Tax (up £17.8 billion or 10.7%, being influenced by inflation and substitutionary affects during the energy crisis), Income Taxes (up £26.0 billion or 10.8%, being boosted by record self-assessed taxes) and Corporation Tax (up £10.6 billion or 14.7%, being boosted by the Energy Profits Levy from June onwards).

Boosted by payments for the now cancelled Health and Social Care Levy between April and October 2022, compulsory social contributions (largely National Insurance) increased by £16.7 billion (or 10.4%) over the same period.

Central government current expenditure
Central government current expenditure was £967.0 billion in the FYE 2023, an increase of £74.0 billion (8.3%) compared with FYE 2022, reflecting the impact of rising inflation and energy costs.

The interest payable on debt
The interest payable on debt increased to £106.6 billion, £34.0 billion (46.9%) more compared with FYE 2022, as the rises in the Retail Prices Index have increased the interest payable on index-linked gilts.

This financial year has seen the two highest monthly amounts on record for debt interest payable in June (£20.0 billion) and December (£18.0 billion) 2022.

Table of contents
Main points
March indicators at a glance
Borrowing in March 2023
Borrowing in financial year ending March 2023
The public sector balance sheet
Revisions
Public sector finances data
Glossary
Measuring the data
Strengths and limitations
Related links
Cite this statistical bulletin
Print this statistical bulletin

Download as PDF

1.Main points
Public sector net borrowing (PSNB ex) in March 2023 was £21.5 billion, £16.3 billion more than in March 2022, and the second-highest March borrowing since monthly records began in 1993.

PSNB ex in the financial year ending (FYE) March 2023 was initially estimated at £139.2 billion (or 5.5% of gross domestic product (GDP)), £18.1 billion more than in the FYE March 2022 and the fourth-highest FY borrowing since records began in 1946.

PSNB ex in the FYE March 2023 was £13.2 billion less than forecast by the Office for Budget Responsibility (OBR); however, these are not final figures, and they will be revised over the coming months as we replace our initial estimates with provisional and then final outturn data.

Public sector current budget deficit (PSCB ex) in the FYE March 2023 was initially estimated at £87.4 billion (or 3.5 % of GDP), £15.8 billion more than in the FYE March 2022 and the sixth-highest FY budget deficit since records began in 1946.

Public sector net debt (PSND ex) at the end of March 2023 was £2,530.4 billion or around 99.6% of GDP, with the debt-to-GDP ratio at levels last seen in the early 1960s.

PSND ex excluding the Bank of England was £2,246.9 billion or around 88.5% of GDP, which was £283.5 billion lower than the wider measure.

Our estimate of UK public sector net worth (PSNW ex), published for the first time this month, was a deficit of £605.8 billion at the end of March 2023.

Central government net cash requirement (excluding UK Asset Resolution Ltd and Network Rail) was £25.1 billion in March 2023, bringing the total for the FYE March 2023 to £111.3 billion, £4.1 billion less than forecast by OBR.

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A breakdown of net borrowing by sub-sector and a summary of central government receipts and expenditure data are presented in Tables 1 to 3 of our Public sector finances summary tables: Appendix M.

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2.March indicators at a glance

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3.Borrowing in March 2023
Initial estimates for March 2023 show that the public sector spent more than it received in taxes and other income, requiring it to borrow £21.5 billion.

Public sector receipts were £88.8 billion, £2.0 billion (2.3%) more than in March 2022, though this rise in income was insufficient to offset the £18.3 billion (19.9%) rise in total public sector spending, which reached £110.3 billion in March 2023.

Figure 1: The £21.5 billion borrowed in March 2023 was £14.5 billion more than in March 2020, at the start of the coronavirus (COVID-19) pandemic
Public sector net borrowing excluding public sector banks, £ billion, UK, March 2020 to March 2023
Monthly public sector net borrowing (PSNB ex)March public sector net borrowing (PSNB ex)Mar 2020Jul 2020Nov 2020Mar 2021Jul 2021Nov 2021Mar 2022Jul 2022Nov 2022Mar 2023-200204060£ billion
Nov 2021
● Monthly public sector net borrowing (PSNB ex): 7.7
Source: Public sector finances from the Office for National Statistics
Notes:
Dataset identifier code: -J5II
Download this chartFigure 1: The £21.5 billion borrowed in March 2023 was £14.5 billion more than in March 2020, at the start of the coronavirus (COVID-19) pandemic
Image .csv .xls
Central government forms the largest part of the public sector and the relationship between its receipts and expenditure is the main determinant of public sector borrowing.

In March 2023 central government received £81.0 billion in taxes and other income, £1.6 billion (2.0%) more than in March 2022. However, over the same period spending increased by £15.1 billion (16.8%) to £104.7 billion, in part reflecting the cost of the combined energy support schemes provided to households and businesses in March 2023, initially estimated at around £8.0 billion.

As a result, central government borrowed £23.7 billion in March 2023, more than double the £10.2 billion borrowed in March 2022.

A breakdown of net borrowing by sub-sector and a summary of central government receipts and expenditure data are presented in Tables 1 to 3 in our Public sector finances summary tables: Appendix M.

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4.Borrowing in financial year ending March 2023
The £21.5 billion borrowed in March 2023 combined with a reduction of £14.6 billion to our previously published financial year-to-February borrowing estimate brings the total borrowed in the financial year ending (FYE) 2023 to £139.2 billion.

This was £18.1 billion more borrowing than in the FYE 2022 and the fourth-highest FYE borrowing since monthly records began, behind FYE 2021 (during the coronavirus (COVID-19) pandemic) and both the FYE 2010 and FYE 2011 (after the effects of the global financial downturn).

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This release presents the initial estimates of UK public sector finances for the FYE 2023; these are not final figures, and they will be revised over the coming months as we replace our initial estimates with provisional and then final outturn data.

Figure 2: The Office for Budget Responsibility (OBR) forecast that borrowing in the FYE 2023 will settle at £152.4 billion, £13.2 billion more than the ONS' first initial estimate
Public sector net borrowing excluding public sector banks, £ billion, UK, financial year ending (FYE) 1994 to FYE 2023
Net borrowing - Full financial yearNet borrowing - Full financial year OBR forecastFYE 1994FYE 1998FYE 2002FYE 2006FYE 2010FYE 2014FYE 2018FYE 2022-1000100200300400£ billion
Source: Public sector finances from the Office for Budget Responsibility and the Office for National Statistics
Notes:
Dataset identifier code: -J5II

This chart uses forecast data published in OBR's Economic and fiscal outlook - March 2023.

Download this chartFigure 2: The Office for Budget Responsibility (OBR) forecast that borrowing in the FYE 2023 will settle at £152.4 billion, £13.2 billion more than the ONS' first initial estimate
Image .csv .xls
Public sector borrowing consists of two broad components: the current budget deficit and its capital expenditure (or net investment).

In the FYE 2023, the public sector current budget deficit (or borrowing to fund its day-to-day activities) was £87.4 billion (or 3.5% of GDP). This was £15.8 billion (or 0.4% of GDP) more than in FYE 2022, with the steady rise in receipts not enough to offset the £34.0 billion increase in interest payable on the government's debt and the initally estimated £41.2 billion cost of the combined energy support schemes and other one-off costs.

Over the same period, public sector net investment was £51.8 billion (or 2.1% of GDP), £2.4 billion more (unchanged as a percentage of GDP) than in FYE 2022, with a combination of several smaller changes partially offset by a £10.0 billion upward revaluation of the student loans portfolio.

Central government forms the largest part of the public sector and the relationship between its receipts and expenditure is the main determinant of public sector borrowing.

Table 1: Public sector net borrowing by sub-sector
Public sector net borrowing by sub-sector compared with the same month a year earlier, UK
Sub-sector Dataset identifier code Financial year (£ billion) Change on a year ago
2022/23 2021/22 £ billion percentage
Central Government -NMFJ 138.3 143.0 -4.8 -3.3
Local Government -NMOE 4.6 -3.7 8.3 -
Sub-total: General Government -NNBK 142.9 139.4 3.5 2.5
Public Corporations -CPCM -2.1 -2.0 -0.1 -3.2
Public Sector Pensions -CWNY -4.1 -7.3 3.2 43.9
Sub-total: Public Sector ex BoE and Banks [note 1] -CPNZ 136.7 130.1 6.6 5.1
Bank of England -JW2H 2.5 -9.0 11.5 -
Sub-total: Public Sector ex [note 2] -J5II 139.2 121.1 18.1 15.0
Public Sector Banks -IL6B -9.9 -9.1 -0.7 -8.1
Total: Public Sector -ANNX 129.4 112.0 17.4 15.5
Memo: Central government net cash requirement [note 3] M98R 111.3 129.2 -17.9 -13.9
Source: Public sector finances from the Office for National Statistics

Notes

Public Sector excluding Bank of England and the public sector controlled banks
Public Sector excluding the public sector controlled banks,Excludes Network Rail Limited and UK Asset Resolution Limited,The data in this table corresponds to that published in table PSA2 of Public sector finances tables 1 to 10: Appendix A
Download this tableTable 1: Public sector net borrowing by sub-sector
.xls .csv
Central government receipts and expenditure data are presented in Tables 1 to 3 of our Public sector finances summary tables: Appendix M. A further detailed breakdown of public sector income is presented in Public sector current receipts: Appendix D.

Central government receipts
Total central government receipts were £929.0 billion in the FYE 2023, an increase of £88.0 billion (10.5%) compared with FYE 2022.

Of these, tax receipts increased by £67.3 billion (10.7%) to £696.0 billion with growth strong in Value Added Tax (up £17.8 billion or 10.7%, being influenced by inflation and substitutionary affects during the energy crisis), Income Taxes (up £26.0 billion or 10.8%, being boosted by record self-assessed taxes) and Corporation Tax (up £10.6 billion or 14.7%, being boosted by the Energy Profits Levy from June onwards).

Boosted by payments for the now cancelled Health and Social Care Levy between April and October 2022, compulsory social contributions (largely National Insurance) increased by £16.7 billion (or 10.4%) over the same period.

Central government current expenditure
Central government current expenditure was £967.0 billion in the FYE 2023, an increase of £74.0 billion (8.3%) compared with FYE 2022, reflecting the impact of rising inflation and energy costs.

The interest payable on debt
The interest payable on debt increased to £106.6 billion, £34.0 billion (46.9%) more compared with FYE 2022, as the rises in the Retail Prices Index have increased the interest payable on index-linked gilts.

This financial year has seen the two highest monthly amounts on record for debt interest payable in June (£20.0 billion) and December (£18.0 billion) 2022.

Figure 3: The interest payable on index-linked gilts rises and falls with the Retail Prices Index (RPI) adding volatility to central government debt interest costs
Central government debt interest payable, £ billion, UK, March 2021 to March 2023
Interest payableIndex-linked gilt principal uplift component of interest payable [1]Other components of interest payableMar 2021Jun 2021Sep 2021Dec 2021Mar 2022Jun 2022Sep 2022Dec 2022Mar 2023-50510152025£ billion
Aug 2022
● Interest payable: 8.5
● Index-linked gilt principal uplift component of interest payable [1]: 4.7
● Other components of interest payable: 3.8
Source: Public sector finances from the Office for National Statistics
Notes:
Net of redemption proceeds.
Dataset identifier codes: NMFX and MW7L
Download this chartFigure 3: The interest payable on index-linked gilts rises and falls with the Retail Prices Index (RPI) adding volatility to central government debt interest costs
Image .csv .xls
On 18 July 2022, we published an article explaining The calculation of interest payable on government gilts.

Energy support payments
Energy support payments were initially estimated as £41.2 billion in the FYE 2023. Those paid to energy suppliers are recorded as subsidies, while those paid to consumers, are recorded as other current grants.

Subsidy payments
Subsidy payments increased to £56.0 billion, £8.8 billion (18.5%) more than in the FYE 2022, largely because of the cost of the Energy Price Guarantee for households and the Energy Bill Relief Scheme for businesses across the UK, which has been initially estimated at £29.7 billion between October 2022 to March 2023. This increase in expenditure was partially offset by the reduced cost of the COVID-19 job support schemes Coronavirus Job Retention Scheme (£8.5 billion) and Self-Employed Income Support Scheme (£8.3 billion) paid during FYE March 2022.

Other current grants
Other current grants increased to £37.1 billion, £16.5 billion (80.3%) more than in the FYE 2022, largely because of the £11.5 billion cost of Energy Bills Support Scheme paid to consumers in Great Britain between October 2022 to March 2023. Additionally, a £3.2 billion cost-of-living Council tax rebate was paid to households in England and Wales in April 2022 and a £1.1 billion charge relating to the interest payable on historic customs duties owed to the European Commission was recorded in January 2023.

Net social benefits
Net social benefits increased to £254.2 billion, £19.1 billion (8.1%) more compared with FYE 2022, partly because of cost-of-living payments recorded in July (£2.4 billion), September (£0.9 billion) and November 2022 (£2.4 billion), along with an increase to the winter fuel allowance in September 2022 (£2.5 billion). The remainder of the growth largely reflects increases in state pension and universal credit payments.

Central government net investment
Central government investment was £65.3 billion in the FYE 2023, an increase of £6.1 billion (10.3%) compared with FYE 2022.

Payments totalling £5.0 billion were made to the Bank of England Asset Purchase Facility Fund (as a part of the indemnity agreement) and a one-off payment of £1.2 billion to the European Commission relating to historic customs duties owed to the European Commission was recorded in January 2023.

A reduction of the expected losses of the Covid loan guarantees scheme and the impact of student loan policy changes, totalling £7.2 billion were recorded in March 2022 adding to the year-on-year increase.

These increases were partially offset by a £10.0 billion increase in the estimated value of the outstanding student loan portfolio, recorded as a capital transfer from the private sector to central government in December 2022.

The remainder of the growth largely reflects regular data movements rather than one-off effects.

The affordability of borrowing FYE March 2023
Expressing borrowing as a ratio of gross domestic product (GDP) - the value of the output of the economy - gives an estimate of its affordability and provides a more robust comparison of the UK’s fiscal position over time.

The coronavirus (COVID-19) pandemic had a substantial impact on the economy as well as public sector borrowing. Expressed as a ratio of GDP, borrowing in the FYE March 2021 was 15.0%, the highest for 75 years.

This ratio fell by 9.8 percentage points to 5.2% in the FYE March 2022 as the economy recovered from the coronavirus pandemic. However, initial estimates show that for the 12 months to March 2023, the ratio has risen by 0.3 percentage points to 5.5%, in part because of the impact of energy prices on the economy and public finances.

Read the full report HERE