UK Borrowing Tops Forecast Again in July as ONS Corrects a VAT Data Error
- ▸The UK borrowed £1.8 billion in July 2026 — £2.3 billion above the Office for Budget Responsibility's forecast and 68.7% higher than July 2025 — according to the ONS's August 21 release, even as strong self-assessed income tax receipts helped offset higher spending.
- ▸The same release corrected an HMRC processing error that had overestimated VAT receipts for March, April, and May 2026 by roughly £235 million each, meaning borrowing in those months had previously been understated by a similar amount.
- ▸Public sector net debt reached £2,984.9 billion, or 94.1% of GDP — a share last seen in the early 1960s — while borrowing for the financial year to date, £56.7 billion, ran below last year's pace but still above the OBR's own forecast.
Britain's public finances offered a mixed picture in the latest official data, released August 21, 2026 by the Office for National Statistics. The government borrowed £1.8 billion in July — a relatively small figure by historical standards, the 16th-lowest July on record — but still £2.3 billion more than the Office for Budget Responsibility had forecast, and 68.7% above what was borrowed in July a year earlier.
The same release included a correction. HM Revenue and Customs told the ONS it had found a processing error in the VAT receipts data used in June's release: VAT collections for March, April, and May 2026 had each been overstated by around £235 million. Because borrowing is calculated from the gap between what the government spends and what it collects, that means borrowing in those three months had actually been understated by a similar amount. The ONS has now corrected the figures in this release.
Looking at the bigger picture, cumulative borrowing for the financial year running from April to July stands at £56.7 billion — lower than the same period last year, but still running ahead of the OBR's own forecast for the year. Public debt closed July at just under £3 trillion, or 94.1% of the size of the UK economy, a debt burden not seen since the early 1960s.
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Cite This Article
EconoLens Editorial Team. (2026, August 24). UK Borrowing Tops Forecast Again in July as ONS Corrects a VAT Data Error. EconoLens. https://www.econolens.co.in/news/uk-public-finances-july-2026-vat-correction
The EconoLens editorial team covers global macroeconomics, monetary policy, fiscal policy, and international trade. All content is AI-assisted and fact-checked.