UK May Deficit Jumps 30% to £23.3 Billion as Inflation Lifts Debt Costs
Updated
Updated · Reuters · Jun 19
UK May Deficit Jumps 30% to £23.3 Billion as Inflation Lifts Debt Costs
3 articles · Updated · Reuters · Jun 19
Summary
Britain ran a £23.3 billion budget deficit in May, up 30% from a year earlier and far above the £18.5 billion economists had expected.
Debt interest costs drove the miss: May servicing costs rose 54% as the UK’s large stock of inflation-linked bonds repriced with a three-month lag to earlier retail price inflation.
For the first two months of the 2026/27 fiscal year, public sector net borrowing reached £46.3 billion, 24% above a year earlier and well above the OBR’s £38.6 billion forecast.
The weaker start raises pressure on the government’s budget plans as benefits and pension costs rose 7.4%, tax receipts increased only 4.1%, and officials warned debt-interest costs could climb again next month.