New Chancellor given pre-Budget challenge as borrowing jumps unexpectedly

Susannah Streeter, chief investment strategist at Wealth Club, says the figures are concerning.

She said: “The latest snapshot of UK Government borrowing won’t do much to assuage fears that Britain is living beyond its means.

“Borrowing came in at £1.8 billion in July 2026, which was £0.7 billion more than in July 2025, and £2.3 billion above the Office for Budget Responsibility’s forecast.

“Even though the amount the Exchequer is pulling in through higher taxes grew, helped by a strong influx of self-assessed income tax revenue payments, it’s being outpaced by spending on public services, benefits and debt payments.

“Although debt interest costs were lower than in recent months, they are stubbornly higher than a year ago, which is keeping the new Prime Minister in a highly tricky position.

“It comes at a time when Andy Burnham is under pressure to deliver more meaningful support to households facing a cost-of-living squeeze, but he’s still operating under the highly watchful eye of the bond market.

“This is the latest borrowing data to arrive under new Chancellor John Healey’s watch and it is likely to lead to difficult decisions at the Treasury.

“Signs of greater profligacy with taxpayers’ money could set off another spiral higher in borrowing costs, limiting available funds even further, given the eye-watering cost of servicing the debt.”