Government borrowing falls in December
By Michele Maatouk
Date: Thursday 22 Jan 2026
(Sharecast News) - UK government borrowing fell in December 2025, according to figures released on Thursday by the Office for National Statistics.
Public sector borrowing declined to £11.6bn, down by £7.1bn or 38% on December 2024. Despite the drop, it was the tenth highest December figure since monthly records began in 1993, not adjusted for inflation.
Borrowing is the difference between total public sector spending and income.
Borrowing in the financial year to December was £140.4bn, down by £0.3bn or 0.2% on the same nine-month period of 2024, but still the third-highest April to December borrowing on record after those of 2020 and 2024.
ONS senior statistician Tom Davies said: "Borrowing in December was substantially down on the same month in 2024, as a result of receipts being up strongly on last year whereas spending is only modestly higher.
"However, across the first nine months of the financial year as a whole, borrowing was fractionally lower than in the same period in 2024."
Danni Hewson, head of financial analysis at AJ Bell, said: "The significant fall in government borrowing in December will be a relief for the Treasury, especially since January's numbers are likely to look even better with a surge in self-assessment receipts expected.
"Spending nudged up compared with the previous year, primarily because of increases to benefit payments and pay rises, but that was more than offset by an increase in the cash coming into the government's coffers.
"Frozen tax thresholds coupled with chunky pay rises mean people have been paying more tax, and Rachel Reeves' changes to employer National Insurance also helped total receipts shoot up by £7.7 billion.
"But zoom out to take in the full financial year to date and the picture isn't quite as rosy, with total borrowing to the end of December at levels only seen twice before. The deficit is reducing, but the pace of the reduction is glacially slow. With further increases to benefit payments on the way in April, the pressure on the public purse is still uncomfortable.
"Stabilisation is one thing and if cost pressures can be kept in check the path forward looks less boggy than what's behind us. But inflation is still sticky, interest on all that debt is up on the same period last year and growth remains sluggish."
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