The Office for National Statistics (ONS) published the monthly public sector finances for February on Friday 20 March 2026, reporting a provisional deficit of £14bn for the month that brought the cumulative deficit for the 11 months to £126bn, £21bn over budget.

Martin Wheatcroft, external advisor on public finances to ICAEW, said: “The Chancellor will have been hugely disappointed by the £13bn budget overrun in the public sector finances in February, taking the year-to-date overrun to £21bn, and what that means for the likely outturn for the full financial year to March.

“However, this is likely to be small in comparison with the likely cost of supporting households facing very large rises in their energy bills later this year as the global energy crisis continues to worsen.”

He continued: “Her principal issue is that there is no absolute benchmark level of borrowing or debt that she can use to calculate how much money she might be able to raise. Instead, it will be a matter of guessing just how far she can diverge from her self-imposed fiscal rules while still maintaining market confidence in the creditworthiness of the UK government.”

Month of February 2026

The provisional shortfall of £14bn in the month is the second highest February deficit since monthly records began in 1993 according to the ONS.

The deficit comprised a current budget deficit of £5bn, being receipts of £105bn less current spending of £110bn, and net investment of £9bn. The deficit was £2bn higher than in February last year, comprising £9bn from higher receipts offset by £8bn from higher current spending and £3bn from higher net investment.

Receipts of £105bn for the month were £4bn above the £101bn average for the previous 10 months, while current spending of £110bn was £3bn more than the £107bn monthly average. Net investment in February of £9bn was £4bn above the £5bn monthly average in the first 10 months.

The monthly deficit is £13bn higher than budgeted, comprising a £9bn negative variance on receipts less current spending and a £4bn overspend on net investment.

Borrowing to finance the deficit of £14bn was partially offset by a £5bn cash inflow from working capital and lending activities to result in an increase public sector net debt of £9bn from £2,871bn on 31 January to £2,880bn on 28 February 2026.

11 months to February 2026

The provisional deficit for the first 11 months of the financial year of £126bn is a £12bn improvement over the £138bn cumulative deficit for the same period last year but is still the fourth highest 11-month deficit since monthly records began.

This comprises a cumulative current budget deficit of £62bn (receipts of £1,117bn less current spending of £1,179bn) and net investment of £64bn. The current budget deficit is £21bn overbudget, while net investment is now on target.

With a budgeted deficit of £13bn for March, this suggests that the full-year deficit is on track to exceed OBR’s autumn forecast of £138bn for 2025/26 as opposed to its more recent spring forecast of £133bn.

Table 1 highlights how year-to-date receipts of £1,117bn were 8% higher than the same period last year, cumulative current spending of £1,179bn was 6% higher and net investment of £64bn was 8% higher.

• Income tax receipts (including self-assessment) were up 9% from a combination of inflation and fiscal drag from frozen tax allowances.
• National insurance receipts were up 18%, reflecting the increase in employer national insurance from the start of the financial year.
• VAT receipts were up 4%, slightly ahead of consumer price inflation.

The 6% increase in current spending to £1,179bn in the first 11 months has principally been driven by public sector pay rises, higher supplier costs, and the uprating of welfare benefits.

Current spending includes debt interest of £125bn that is £6bn higher than in the first 11 months of 2024/25. This is primarily a consequence of a £6bn increase in indexation on inflation-linked debt, with interest on variable and fixed-interest debt flat as falling interest rates this year offset the effects of a higher level of debt.

Net investment of £64bn in the 11 months to February was £5bn more than in the same period last year. This comprised capital expenditure of £99bn (up by £8bn from the same period a year ago) and capital transfers (capital grants, research and development funding, student loan write-offs) of £31bn (in line with last year) less depreciation of £66bn (up £3bn).

Borrowing and debt

Table 2 summarises how the government borrowed £75bn in the first 11 months of the financial year to take public-sector net debt to a provisional £2,880bn on 28 February 2026.

The movement comprised public sector net borrowing (PSNB) of £126bn to fund the deficit less a £51bn net inflow from working capital movements and government lending.

The ratio of public sector net debt to GDP fell by 0.1 percentage points from 93.2% of GDP at the start of the financial year to 93.1% on 28 February 2026, once 2.5 percentage points of ‘inflating away’ caused by inflation and economic growth adding to GDP (the denominator in the ratio) is taken account of.

Public sector net debt on 31 January 2026 of £2,880bn comprised gross debt of £3,411bn less cash and other liquid financial assets of £531bn.

Public sector net financial liabilities were £2,551bn, being public sector net debt plus other financial liabilities of £734bn less illiquid financial assets of £1,063bn.

Reported public sector negative net worth was £664bn, being net financial liabilities less non-financial assets of £1,887bn, although this is understated as it excludes in excess of one trillion pounds in unfunded employee pension obligations.

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 quarterly in arrears and are based on budget or high-level estimates in the absence of monthly data collection.

This month the ONS revised the reported deficit for the last financial year (2024/25) down by £1bn to £152bn. Public sector net debt as of 31 January 2026 was revised upwards by £4bn to £2,871bn.

For further information, read the public sector finances release for February 2026.