UK April Borrowing Hits £24.3bn, Exceeding Forecasts Amid Inflation and War

The United Kingdom borrowed more than anticipated in April, as high inflation drove up the cost of pensions and benefits, compounded by concerns over the Iran war and political uncertainty that increased debt costs.

The Office for National Statistics (ONS) reported that public sector net borrowing—the difference between government spending and income—reached £24.3 billion in April 2026, a £4.9 billion increase compared with April 2025.

Amid bond market jitters fueled by the Middle East conflict and a Labour leadership challenge, the borrowing figure exceeded City economists and the Office for Budget Responsibility (OBR) forecasts by £3.4 billion.

Rising borrowing costs in financial markets pushed the UK’s debt interest payments to £10.3 billion in April, £900 million more than a year earlier and the highest for any April on record.

Grant Fitzner, the ONS chief economist, said: “Borrowing this month was substantially higher than in April last year and although receipts increased compared with April 2025, this was more than offset by higher spending on benefits and other costs.”

The figures follow a sharp increase in the UK government’s borrowing costs in financial markets in recent weeks, with Keir Starmer’s grip on power appearing to weaken and UK government bonds, known as gilts, facing heavy selling pressure.

Amid febrile conditions in global markets, investors fear his successor as prime minister would add to borrowing. Earlier this week, the International Monetary Fund urged Britain to “stay the course” on Chancellor Rachel Reeves’s plan to cut government borrowing, warning the government lacked room to add significantly to its already elevated debt levels.

Martin Beck, chief economist at the consultancy WPI Strategy, said: “A future prime minister may rail against being ‘in hock’ to the bond markets, but that’s a difficult argument to sustain for a government on course to borrow well over £100bn this year and dependent on investor willingness to fund its deficit.”

Inflation-linked increases in many benefits and the pensions triple lock also contributed to the borrowing increase in April. The ONS said net social benefits paid by central government rose by £2.7 billion to £29.5 billion for the month.

The figures come after Britain defied expectations with a stronger-than-anticipated economic performance at the start of 2026, before the outbreak of the Iran war.

Highlighting the strength of the economy, the ONS revised down its borrowing estimate for the financial year ended in March 2026 by £3 billion to £129 billion. This figure was 15% lower than the borrowing figure a year earlier and £3.7 billion below the OBR’s official forecasts.

Lucy Rigby, the chief secretary to the Treasury, said: “Earlier this week the IMF agreed we had the right economic plan to reduce the deficit.

“We are cutting borrowing and debt – with our actions reducing government borrowing by over £20bn last year – while driving growth through £120bn of additional capital investment over the parliament.”