Public sector finances UK March 2025 - Borrowing Moves Higher

24th April 2025

Borrowing - the difference between total public sector spending and income - was £16.4 billion in March 2025. this was £2.8 billion more than in March 2024 and the third-highest March borrowing since monthly records began in 1993.

Borrowing in the financial year ending (FYE) March 2025 was provisionally estimated at £151.9 billion; this was £20.7 billion more than in the same twelve-month period a year earlier and £14.6 billion more than the £137.3 billion forecast by the Office for Budget Responsibility (OBR).

Compared with the annual value of the UK's economy, borrowing in the FYE March 2025 was provisionally estimated at 5.3% of the UK's gross domestic product (GDP), 0.5 percentage points more than in the same twelve-month period a year earlier and the eighth highest value since the financial crisis in the FYE 2009.

The current budget deficit - borrowing to fund day-to-day public sector activities - in the FYE March 2025 was provisionally estimated at £74.6 billion; this was £12.6 billion more than in the same twelve-month period a year earlier and £13.9 billion more than the £60.7 billion forecast by the OBR.

The current budget deficit in the FYE March 2025 was provisionally estimated at 2.6% of the GDP, 0.3 percentage points more than in the same twelve-month period a year earlier and the 12th highest value since the financial crisis in the FYE 2009.

Public sector net debt excluding public sector banks was provisionally estimated at 95.8% of GDP at the end of March 2025; this was 0.2 percentage points more than at the end of March 2024 and remains at levels last seen in the early 1960s.

Public sector net financial liabilities excluding public sector banks were provisionally estimated at 83.5% of GDP at the end of March 2025; this was 2.6 percentage points more than at the end of March 2024, but 12.3 percentage points less than for public sector net debt.

Central government net cash requirement (excluding UK Asset Resolution Ltd and Network Rail) was £21.1 billion in March 2025; this was £7.4 billion less than in March 2024, and brings the total for the FYE March 2025 to £180.5 billion, £7.9 billion more than forecast by the OBR.

Borrowing in March 2025
Initial estimates show that the public sector spent more than it received in taxes and other income in March 2025, requiring it to borrow £16.4 billion.

This was £2.8 billion more borrowing than in March 2024. It is also the third-highest March borrowing since monthly records began in 1993, behind March 2021 borrowing, during the coronavirus (COVID-19) pandemic period, and March 2023 borrowing, when energy prices rose substantially.

Borrowing in March 2025
Initial estimates show that the public sector spent more than it received in taxes and other income in March 2025, requiring it to borrow £16.4 billion.

This was £2.8 billion more borrowing than in March 2024. It is also the third-highest March borrowing since monthly records began in 1993, behind March 2021 borrowing, during the coronavirus (COVID-19) pandemic period, and March 2023 borrowing, when energy prices rose substantially.

Public sector net borrowing includes two broad components: the current budget and net investment.

The current budget, which is usually in deficit, can be considered as borrowing to fund day-to-day public sector activities. This is the difference between its current receipts and current expenditure, while taking account of capital consumption (depreciation).

Initial estimates show that in March 2025, the current budget was in deficit by £0.2 billion. This was £4.1 billion more than in March 2024, when it was in surplus by £3.9 billion.

Public sector net borrowing is the sum of the current budget deficit and the public sector's net (capital) investment.

Net investment was estimated at £16.2 billion in March 2025, which was £1.3 billion less than in March 2024.

Central government borrowing
Central government forms the largest part of the public sector and includes government departments such as HM Revenue and Customs (HMRC), the Department of Health and Social Care, the Department for Work and Pensions, the Department for Education, and the Ministry of Defence, as well as other government agencies.

The relationship between central government's receipts and expenditure is an important determinant of public sector net borrowing. Central government borrowed £16.2 billion in March 2025; this compares with £16.4 billion borrowed by the whole public sector.

Central government current receipts
Central government's current receipts were £93.5 billion in March 2025, £2.5 billion more than in March 2024. Of this £2.5 billion increase in income:

central government tax receipts increased by £2.2 billion to £69.3 billion; this included increases of £1.5 billion in Income Tax, £0.5 billion in stamp duty (on land and property), £0.2 billion in Value Added Tax (VAT), and £0.1 billion in Corporation Tax receipts

compulsory social contributions decreased by £0.3 billion to £17.7 billion

A detailed breakdown of central government income is presented in our Public sector current receipts: Appendix D dataset.

Central government current expenditure
Central government spending data for March 2025 are provisional. There is uncertainty around these estimates until more detailed departmental information becomes available over time.

Central government's current expenditure was provisionally estimated as £88.9 billion in March 2025, £6.2 billion more than in March 2024. Of this overall £6.2 billion increase in spending:

central government departmental spending on goods and services increased by £3.2 billion to £39.6 billion, as pay rises and inflation increased running costs

net social benefits paid by central government increased by £2.5 billion to £26.0 billion, largely caused by inflation-linked increases in many benefits and pensions

central government debt interest payable increased by £1.3 billion to £4.3 billion, largely because the interest payable on index-linked gilts rises and falls with the Retail Prices Index (RPI)

payments to support the day-to-day running of local government decreased by £0.5 billion to £13.1 billion; these intra-government transfers are both central government spending and a local government receipt, so they have no effect on overall public sector borrowing

payments abroad decreased by £0.5 billion to £1.5 billion, largely because of smaller net payments made to the EU

Central government net investment
Central government net investment decreased by £1.2 billion to £17.1 billion compared with March 2024; historically, March tends to be a peak month for investment spending.

Borrowing in other subsectors
Our Public sector finances borrowing by subsector: Appendix R dataset provides further detail on data presented in Table 1, including transactions related to borrowing by each subsector and their contribution to total public sector borrowing in a matrix table format. The time period presented in the matrix table can be changed using the drop-down box feature.

Interest payable on central government debt
The interest payable on central government debt was £4.3 billion in March 2025, £1.3 billion more than in March 2024. This was the highest central government interest payable in any March since monthly records began in 1997, though only £0.2 billion above the previous record in March 2023.

The interest payable on index-linked gilts rises and falls with the Retail Prices Index (RPI), adding volatility to central government debt interest costs. This additional RPI inflation-linked interest is described as "capital uplift" and affects the value of the gilt principal.

Capital uplift was minus £0.6 billion in March 2025, largely reflecting the 0.1% decrease in the RPI between December 2024 and January 2025. This decreased the capital uplift on the three-month lagged index-linked gilts which make up around 95% of the index-linked gilt stock.

Figure 2 shows this series as the light blue portion of each stacked bar. It excludes the uplift payable at the time of an index-linked gilt redemption. These redemption payments are already recorded as accrued interest payable across the life of each index gilt.

Borrowing in the financial year ending March 2025
The public sector spent more than it received in taxes and other income in the financial year (FYE) to March 2025. Initial estimates show it borrowed £151.9 billion over the latest 12-month period, £20.7 billion more than in the FYE 2024.

Borrowing in the FYE 2025 was £14.6 billion more than the £137.3 billion forecast by the Office for Budget Responsibility (OBR) in March 2025. Of this, central government and local government borrowing were, respectively, £10.2 billion and £2.6 billion above OBR forecast amounts.

Within public sector borrowing in the FYE 2025, the current budget deficit was £74.6 billion. This is £12.6 billion more than in FYE 2024.

Public sector net investment increased by £8.2 billion to £77.3 billion for the same 12-month period.

Central government current expenditure
Central government's current expenditure was provisionally estimated as £1,031.2 billion in the FYE 2025, £48.5 billion more than in the same 12-month period a year ago. Of this overall £48.5 billion increase in spending:

central government departmental spending on goods and services increased by £29.8 billion to £436.0 billion, as pay rises and inflation increased running costs

net social benefits paid by central government increased by £14.6 billion to £306.1 billion, largely caused by inflation-linked increases in many benefits

payments to support the day-to-day running of local government increased by £9.4 billion to £144.4 billion; these intra-government transfers have no impact on overall public sector borrowing (PSNB ex)

interest payable on central government debt increased by £2.1 billion to £85.0 billion, largely because the interest payable on index-linked gilts rises and falls with the Retail Prices Index (RPI)

net current grants abroad decreased £4.3 billion to £9.7 billion, largely because of smaller net payments made to the EU

subsidies paid by central government decreased by £3.4 billion to £28.9 billion, largely because of the closure of the energy support schemes that were active until June 2023

Central government current budget
Initial data suggests that total central government's current receipts were equal to its total current expenditure at a £ billion level in the FYE 2025. Consequently, the central government current budget deficit of £42.4 billion in the FYE 2025 is completely explained by its capital consumption (depreciation).

At £42.4 billion, central government's current budget deficit was £17.8 billion more than in FYE 2024.

Central government net investment
Central government net investment in the FYE 2025 was £116.1 billion, £4.4 billion less than in the same period a year ago. This £116.1 billion includes £36.3 billion in regular payments from HM Treasury to the BoE APF Fund.

The £8.2 billion reduction in payments to APF were partially offset by a £3.2 billion increase in gross capital formation and other transactions. This included higher payments to the private sector including the £1.7 billion payment to Annington Homes in December 2024 for the repurchase of armed forces personnel housing.

Local government
Initial estimates suggest that local government borrowing was provisionally estimated as £12.0 billion in the FYE 2025. This was £0.4 billion more than in the same period a year earlier. Our provisional monthly estimates for the UK are currently based on published budget data for England, Scotland and Wales, with estimates included for Northern Ireland.

Borrowing in earlier financial years
Initial estimates show the public sector borrowed £151.9 billion in the financial year ending (FYE) March 2025. This was the third-highest borrowing in any financial year since records began in FYE 1947, behind the equivalent 12-month period of the FYE 2021 during the coronavirus (COVID-19) pandemic, and the FYE 2010 following the global financial downturn. However, these estimates have not been adjusted for inflation.

Expressing borrowing as a ratio of gross domestic product (GDP) - the value of everything produced in the UK economy in a 12-month period - gives an estimate of its affordability and provides a more thorough and reliable measure for comparison of the UK's fiscal position over time.

Our first provisional estimate for the total borrowed in the FYE March 2025 as a ratio of gross domestic product (GDP) was 5.3%, 0.5% points higher than in the FYE 2024.

To read he full ONS report with graphs go HERE