The monthly public sector finances release for April 2025 published by the Office for National Statistics (ONS) on 22 May reported a provisional deficit of £20.2bn, £1.0bn more than a year previously and the fourth highest April deficit on record. More positively, the release revised the reported deficit for the year ended 31 March 2025 down by £4bn from £152bn to £148bn.

Alison Ring, ICAEW Director of Public Sector and Taxation, says: “While spending in April was higher than expected, it is too early in the financial year to tell whether the government is on track to meet its revised budget deficit for 2025/26 of £118bn. In reality, the Chancellor may have to spend more on digitalisation and transformation this year if the government is to have any hope of delivering improved public sector productivity and efficiency over the rest of the parliament.

“The provisional numbers for the first month of the 2025/26 financial year were boosted by the employer national insurance tax rise that came into force on 6 April 2025, together with the effect of inflation on income tax, VAT, corporation tax and employee and self-employed national insurance receipts compared with the same month last year.

“The small positive revision that reduced the reported deficit for the last financial year by £4bn to £148bn will be a relief for the Chancellor as she seeks to bring the public finances under control in a turbulent economic environment.”

Better than forecast

The £20.2bn deficit for the month of April 2025 was £1.0bn more than the same month a year previously. This was higher than some external commentators had expected, but the Office for Budget Responsibility (OBR) said that it was £3.5bn better than its monthly forecast profiles for 2025/26 that it published on the same day as this release.

Taxes and other receipts in April 2025 amounted to £91.6bn, up 7% compared with the same month last year (see Table 1). This reflected higher income tax receipts, in part from fiscal drag as personal allowances were frozen, in addition to April’s rise in employer national insurance contributions.

Table 1 also highlights how total current spending of £105.6bn in April 2025 was up by 5% compared with April 2024, with public sector pay rises and other cost pressures driving the higher amount. The fall in debt interest of £1.1bn reflected a £0.9bn reduction in indexation on inflation-linked debt compared with last year due to lower inflation, together with lower interest rates payable on variable and fixed-rate debt offsetting a higher level of debt.

Net investment of £6.2bn in April 2025 was up by 27%, comprising £6.9bn in capital expenditure (up 17% from the same month last year) and £5.4bn in capital grants, student loan write-offs and other items (also up 17%) less £6.1bn in depreciation (up 9%).

Borrowing and debt

Table 2 summarises how the government borrowed £21bn during April 2025, comprising public sector net borrowing (PSNB) to fund the deficit of £20bn, plus £1bn in net cash outflows for government lending activities and working capital movements.

The consequence was an increase in public sector net debt from £2,807bn on 31 March 2025 to £2,828bn. This is £1,012bn or 56% more than the £1,816bn on 31 March 2020 at the start of the pandemic.

Table 2 also illustrates how the debt-to-GDP ratio increased from 95.1% of GDP on 31 March 2025 to 95.6% on 30 April 2025 as a consequence of debt movements being partly offset by the ‘inflating away’ effect of inflation and economic growth increasing GDP, the denominator in the net debt-to-GDP ratio.

Public sector net debt on 30 April 2025 of £2,828bn comprised gross debt of £3,208bn less cash and other liquid financial assets of £380bn.

Public sector net financial liabilities were £2,472bn, comprising net debt of £2,828bn plus other financial liabilities of £706bn less illiquid financial assets of £1,062bn. Public sector negative net worth was £871bn, being net financial liabilities of £2,472bn less non-financial assets of £1,601bn.

Revisions and other matters

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.

The latest release saw the ONS revise the reported deficit for the financial year ended 31 March 2025 down by £4bn from £152bn to £148bn, and revise reported net debt at the end of March 2025 down by £7bn from £2,814bn to £2,807bn.