UK borrowing hits £24.5bn as debt interest payments reach September record

Debt tops £3tn for the first time ahead of John Healey's first budget next Wednesday

By LineZotpaper

Published21 October 2026

Updated21 October 2026

Read Time2 min

Sources4 outlets

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The UK government borrowed £24.5bn in September, a higher than expected deficit that pushed total debt through £3tn for the first time, as rising inflation lifted the monthly interest bill to a record, adding pressure on chancellor John Healey before his first budget next Wednesday.

Government borrowing rose to £24.5bn last month, higher than forecast, as rising inflation drove up the cost of servicing the national debt, according to official figures from the Office for National Statistics.

The government paid £10.9bn in debt interest in September, the highest figure for the month since records began and only the eighth time the monthly interest bill has exceeded £10bn. Some government bonds are directly linked to the retail prices index measure of inflation, and the ONS said recent rises in RPI, driven by energy costs linked to the Iran war, added £4bn to interest payments in September alone.

Total government debt is estimated to have reached £3tn for the first time, although as a share of the economy it has fallen to 94%, from 95% a year earlier.

The monthly deficit was up from £17bn in August and £1.9bn higher than the Office for Budget Responsibility had forecast. In the financial year so far, public sector net borrowing stands at £97.8bn, £4.4bn lower than last year but still £6bn higher than the OBR expected.

The figures land a week before Mr Healey delivers his first budget and underline the impact of the Iran war on the public finances. He has stressed his determination to stay within the fiscal rules set by his predecessor, Rachel Reeves, but is widely expected to accept a slimmer buffer, or "headroom", against those rules than the £24bn Reeves had built up at the time of her spring forecast.

Higher inflation tends to be good for tax revenues, but it also squeezes how much government departments can achieve within fixed budgets.

How it's landing

Mohamed A. El-Erian @elerianm

Allianz Advisor

News that UK public borrowing exceeded forecasts comes just a week ahead of the much-anticipated first budget for the Andy Burnham government: The British government borrowed £24.5 billion in September, above ONS projections. Also compounding the pressure on the budgetary formulation process: Total debt has reached £3 trillion for the first time in history. #economy #uk #debt #markets #budget

21 Oct, 6:55 UTC View on X

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Analysis

Why This Matters

The figures arrive days before John Healey's first budget, narrowing the room for new spending while he remains committed to the fiscal rules set by Rachel Reeves.
Government debt passing £3tn for the first time makes the size of the national balance sheet a central political question.
Borrowing is running £6bn above the Office for Budget Responsibility's forecast for the financial year so far, a gap the budget will need to address.

Background

The chancellor of the exchequer presents the government's tax and spending plans in an annual budget, and the fiscal rules act as a self-imposed limit on borrowing. Debt interest costs have been a sustained pressure point on the public finances because a large share of government debt is index-linked, meaning payments rise automatically with inflation. The Iran war, cited by the ONS, has pushed up energy costs and with them the RPI measure of inflation, directly inflating the interest bill.

Key Perspectives

Chancellor John Healey: He has stressed his determination to stay within the fiscal rules set by Reeves, but is widely expected to accept a slimmer headroom cushion against those rules than the £24bn available at the spring forecast.

The Office for Budget Responsibility: The independent watchdog's forecast is the benchmark the government is judged against, and September's deficit came in £1.9bn higher than it expected, with the year-to-date figure £6bn above its projection.

Critics and sceptics: While higher inflation boosts tax revenues, it also raises the debt interest bill and squeezes what departments can deliver within fixed budgets, limiting the new chancellor's room for manoeuvre.

What to Watch

The budget next Wednesday, and the size of the headroom Healey signals against the fiscal rules.
The path of RPI inflation and energy prices linked to the Iran war, which directly drive index-linked debt interest payments.
Monthly borrowing figures through the rest of the financial year against the OBR's forecasts.

Sources

Government borrowing rises above forecasts to £24.5bn ahead of Budget · The Irish News
UK debt pile exceeds £3 trillion one week before Healey’s Budget · City AM
UK government borrowing rises to £24.5bn as John Healey prepares for budget · UK news | The Guardian
UK government borrowing rises to £24.5bn as John Healey prepares for budget · Business | The Guardian

Checked

12 claims in this story checked against 1 source: 10 supported.

Show each claim

SupportedUK government borrowing was £24.5bn in September, higher than expected.Business | The Guardian: “The Treasury ran a higher than expected budget deficit of £24.5bn last month”
SupportedDebt interest payments reached a September record.Business | The Guardian: “Official figures show the government paid £10.9bn in debt interest: the highest September figure since records began”
SupportedGovernment debt reached £3tn for the first time before John Healey's first budget next Wednesday.Business | The Guardian: “Total government debt is estimated to have hit £3tn for the first time”
Partly supportedThe £24.5bn borrowing pushed total debt through £3tn.Business | The Guardian
SupportedRising inflation lifted the monthly interest bill to a record.Business | The Guardian: “as rising inflation pushed up the interest paid on government debt”
SupportedThe government paid £10.9bn in September interest, the highest September figure on record and only the eighth monthly figure above £10bn.Business | The Guardian: “Official figures show the government paid £10.9bn in debt interest: the highest September figure since records began, and only the eighth time the monthly number has been above £10bn.”
SupportedRises in RPI driven by energy costs linked to the Iran war added £4bn to September interest payments.Business | The Guardian: “RPI has increased in recent months as the Iran war has pushed up energy costs. The Office for National Statistics said this had added £4bn to debt interest costs in September alone.”
SupportedDebt was 94% of the economy, down from 95% a year earlier.Business | The Guardian: “although as a share of the size of the economy it has fallen to 94%, from 95% a year ago.”
SupportedThe September deficit was up from £17bn in August.Business | The Guardian: “The £24.5bn monthly deficit on the public finances was up from £17bn in August”
SupportedThe September deficit was £1.9bn higher than the OBR forecast.Business | The Guardian: “and £1.9bn higher than the independent Office for Budget Responsibility had forecast.”
SupportedYear-to-date public sector net borrowing was £97.8bn, £4.4bn lower than last year but £6bn higher than the OBR expected.Business | The Guardian: “In the financial year so far, public sector net borrowing is £97.8bn, the ONS said – £4.4bn lower than last year but still £6bn higher than the OBR expected.”
Partly supportedThe figures landed a week before Healey's first budget.Business | The Guardian: “The data underlines the impact of the Iran war on the public finances, before next Wednesday’s budget.”