UK borrowing in May surges by more than expected

Breaking news from the markets: UK borrowing in May surges by more than expected6 minutes ago Share Save Add as preferred on GoogleAlex Segre/Getty ImagesMay's borrowing figure was higher than the OBR's forecastThe UK borrowed £23. 3bn in May, according to official figures, up almost a third on the same month last year. May's borrowing figure — the difference between spending and income from taxes — was £5.

6bn higher than forecast by the Office for Budget Responsibility (OBR), the independent fiscal watchdog. The OBR forecast was made in March, at which point the impact of the war in the Middle East had not yet become clear. The Office for National Statistics (ONS) said interest payable on government debt jumped to £11.

Economic Details

7bn – the highest ever recorded in any May. "Spending on debt interest, public services, investment and benefits all increased in May 2026, compared with last May," ONS statistician Tom Davies said. This outweighed higher tax receipts, he added.

The cost of borrowing for governments has shot up during the conflict, while the surge in energy prices since the beginning of the Iran war has pushed up inflation. A peace agreement between the US and Iran has led oil prices to drop significantly, but economists have warned that the knock-on effects of the conflict are still on the way. The figures came as Andy Burnham was elected MP for Makerfield in a by-election, paving the way for him to launch a leadership challenge against Keir Starmer.

Capital Economics said the higher-than-expected borrowing highlights "the fragile fiscal backdrop that will face whoever is in 10 Downing Street. ""This will constrain whoever is Prime Minister following a potential leadership challenge after Andy Burnham's win in the Makerfield by-election. "Matt Swannell, the chief economic adviser to forecasters the ITEM Club, said there are outstanding questions about "whether the current plans will be sufficient to reduce public borrowing".

Analyst Views

Chief Secretary to the Treasury Lucy Rigby said: "The war in the Middle East has clearly had an impact on economies around the world. "We have the right economic plan to deal with these challenges — protecting families and businesses from rising costs, while cutting borrowing at a faster rate than any other G7 economy. "Shadow Chancellor Mel Stride said: "Borrowing is out of control.

""The Conservatives are the only party with a plan to balance the books by getting spending under control, especially the welfare bill. "Separate official figures showed that retail spending rose by 1. 2% in May, helped by unseasonably good weather.

Retailers said sales of outdoor furniture and fans were higher for the month due to the weather conditions and promotions. Household goods retailers also saw a 3. 2% increase for the month.

Economists are analysing what the news means for the markets.