UK government borrowing surged to £23.3bn in May – nearly a third higher than the same month last year and £5.6bn above the Office for Budget Responsibility’s March forecast, according to the BBC. The figures highlight the fiscal strain from rising debt costs and the ongoing impact of the Iran conflict.
Borrowing overshoots OBR forecast
The Office for National Statistics (ONS) reported that the £23.3bn borrowing figure – the difference between spending and tax income – was £5.6bn higher than the OBR’s March forecast, which did not fully account for the impact of the war in the Middle East. The OBR forecast had been set before the conflict’s effects became clear.
| Metric | Value |
|---|---|
| May 2026 borrowing | £23.3bn |
| OBR March forecast | £17.7bn (implied) |
| Overshoot | £5.6bn |
Debt interest costs hit record
Interest payable on government debt jumped to £11.7bn – the highest ever recorded for any May, the ONS said. The surge reflects sharp increases in government borrowing costs during the Iran conflict, while energy prices since the start of the war have pushed up inflation. Although a recent peace agreement between the US and Iran has led to a significant drop in oil prices, the BBC reported that economists have warned of further knock-on effects still to come.
Political implications
The borrowing data was released on the same day as the Makerfield by-election, where Andy Burnham was elected MP, paving the way for him to launch a leadership challenge against Keir Starmer, according to the BBC. 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." – Capital Economics, as reported by the BBC.
The combination of record debt costs, a fiscal overshoot, and political uncertainty creates a challenging outlook for the next government’s spending plans. The OBR’s next forecast will be closely watched by investors and corporate strategists assessing the UK’s fiscal credibility.
Next milestones
The ONS will release July borrowing figures on 21 August 2026. The Conservative leadership contest, if triggered by a challenge to Starmer, is expected to conclude by early September.
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