UK government borrowing dropped sharply in December, helped by higher tax income and increased National Insurance contributions that more than covered the rise in public spending, according to new figures from the Office for National Statistics.
Borrowing in December stood at £11.6bn. This was £7.1bn lower than the same month a year earlier, a fall of around 38 percent. The figure also came in below most economist forecasts. However, it was still higher than December 2023, when borrowing was £8.1bn.
The ONS said the main reason for the improvement was strong growth in tax receipts, while spending rose only slightly. Despite the year on year drop, December 2025 still recorded the tenth highest borrowing level for that month since records began in 1993, once inflation is not taken into account.
Tax income rose sharply during the month. The government collected £7.7bn more in taxes than in December 2024, an increase of 8.9 percent. This growth came from higher income tax, corporation tax, VAT, and National Insurance contributions. The ONS noted that changes to employer National Insurance rates, introduced in April last year, also boosted receipts.
Looking at the wider picture, total borrowing for the financial year from April to December reached £140.4bn. This was around £300m lower than the same period in 2024.Despite the improvement, it remained the third highest April to December borrowing total on record, behind 2020 and 2024.
Shadow chancellor Mel Stride criticised the figures, saying Labour had overseen record borrowing outside the pandemic for a second year running. He pointed to high debt interest costs, which he said were nearly double current defence spending.
