The monthly public sector finances release published by the Office for National Statistics (ONS) on Friday 19 December 2025 reported a provisional shortfall between receipts and public spending of £12bn in November 2025 and a cumulative deficit for the eight months then ended of £132bn.

This follows a £20bn increase in the forecast for the full-year deficit to March 2026 to £138bn by the Office for Budget Responsibility (OBR) alongside the Budget.

Martin Wheatcroft, external advisor on public finances to ICAEW, said: “The £16bn provisional budget overrun in the first eight months of the financial year provides further support for the OBR’s decision to increase its forecast for the deficit for the full financial year by £20bn to £138bn.

“The one ray of sunshine for the Chancellor was slightly lower current spending in November partly driven by lower interest expense as interest rates fell and inflation moderated. However, the result for the last third of the financial year will primarily be determined by self-assessment income tax returns due to be submitted by the end of January 2026.”

Month of November 2025

There was a £12bn shortfall between provisional receipts of £95bn and total public spending of £107bn in November 2025. This was £2bn lower than the deficit of £14bn incurred in November last year (£89bn receipts less £103bn total spending) but £3bn more than the budget of £9bn for the month.

Current spending during November of £101bn was less than the £108bn monthly average incurred during the first seven months of the financial year, while net investment of £6bn in the month was £1bn more than the £5bn monthly average to October 2025.

Public sector net debt increased by £33bn during the month (from £2,895bn on 31 October to £2,928bn on 30 November 2025) with £21bn absorbed by working capital movements and lending activities in addition to the £12bn needed to fund the deficit in the month.

Eight months to November 2025

The provisional deficit for the eight months to November 2025 of £132bn was £10bn or 8% more than in the same eight months last year and £16bn more than the £116bn budgeted at the start of the year. The latter can be analysed as a £19bn overrun on the current budget deficit less a £3bn underspend on net investment.

This month’s budget overrun of £16bn is £6bn more than was reported last month, reflecting the £3bn budget overrun in November plus a £4bn revision to prior months, less £1bn in rounding differences.

Table 1 highlights how year-to-date receipts of £765bn were 7% higher than the same period last year, with:

• income tax up 8% from a combination of inflation and fiscal drag from frozen tax allowances, 
• national insurance up 19% as a consequence of the increase in employer national insurance from April 2025 onwards, and 
• VAT receipts up 4% slightly ahead of consumer price inflation.

The 7% increase over last year in current spending to £858bn in the first two-thirds of the financial year has principally been driven by public sector pay rises, higher supplier costs, the uprating of welfare benefits, and higher debt interest. 

Debt interest of £94bn was £8bn higher than for the first eight months of 2024/25, comprising a £7bn increase in indexation on inflation-linked debt as inflation rose again in 2025 and a £1bn increase in interest on variable and fixed-interest debt. The latter reflects a higher level of debt compared with a year ago offset by a lower Bank of England base rate.

Net investment of £39bn in the first eight months of 2025/26 was £3bn or 8% higher than the same period last year. This comprised capital expenditure of £65bn (up by £3bn or 5%) and capital transfers (capital grants, research and development funding, student loan write-offs) of £22bn (up £2bn or 10%) less depreciation of £48bn (up by £2bn or 4%). 

Budget for the rest of the financial year

The deficit was budgeted to be £118bn for the full year ending 31 March 2026, comprising £116bn in the first eight months of the year to November 2025 and £2bn in the remaining four months. The latter comprises:

• a budgeted deficit of £11bn for December 2025, 
• a budgeted surplus of £23bn for January, and 
• deficits of £1bn and £13bn for February and March 2026 respectively. 

The provisional numbers reported this month are broadly consistent with the OBR’s latest estimate for a deficit of £138bn in the 12 months to 31 March 2026, £20bn more than was budgeted.

Borrowing and debt

Table 2 summarises how the government borrowed £123bn in the first eight months of the financial year to take public-sector net debt to a provisional £2,928bn on 30 November 2025. This comprised £132bn in public-sector net borrowing (PSNB) to fund the deficit less a £9bn net inflow from working capital movements and government lending.

The table also illustrates how the debt to GDP ratio increased by 2.3 percentage points from 93.3% of GDP at the start of the financial year to 95.6% on 30 November 2025. 

Incremental borrowing of £123bn, equivalent to 4.1% of GDP, was partly offset by 1.8 percentage points of ‘inflating away’ caused by inflation and economic growth adding to GDP, the denominator in the net debt to GDP ratio. 

Public sector net debt on 30 November 2025 of £2,928bn comprised gross debt of £3,408bn less cash and other liquid financial assets of £480bn. 

Public sector net financial liabilities were £2,605bn, being public sector net debt plus other financial liabilities of £726bn less illiquid financial assets of £1,049bn. Public sector negative net worth was £737bn, being net financial liabilities less non-financial assets of £1,868bn.

Revisions

Caution is needed with respect to the numbers published by the ONS, which are repeatedly revised as estimates are refined and gaps in the underlying data are filled. This includes local government where the numbers are only updated in arrears and are based on budget or high-level estimates in the absence of monthly data collection. 

This month the ONS revised opening public sector net debt down by £5bn to £2,805bn and the previously reported deficit for the seven months to October 2025 up by £4bn to £121bn.

For further information, read the public sector finances release for November 2025.