# New Chancellor given pre-Budget challenge as borrowing jumps unexpectedly

By Danni Hewson — 2026-08-21

AJ Bell head of financial analysis Danni Hewson believes Chancellor John Healey will have to make some fast, tactical changes when it comes to delivering the Autumn Budget after government borrowing increased.

The Office for National Statistics (ONS) has announced that government borrowing had unexpectedly risen to £1.8 billion last month.

Hewson said: “For John Healey, it means he’s going to have to work on some fancy footwork if he’s going to deliver the kind of feel-good Budget the country is clamouring for if it’s going to invest and grow.

“And that means months of speculation which in previous years have resulted in businesses and households simply pressing pause on their spending plans as they wait to see how bad things might get.

“The new PM has been enjoying his honeymoon period, with the good weather contributing to a boost in consumer confidence, but the realities of rising inflation could quickly undermine that confidence especially once the heating needs to be turned on.”

The borrowing jump came despite a record for income tax receipts last month.

Hewson added: “Despite self-assessment tax receipts hitting a record high for the month, borrowing shot up by a surprising 68.7 per cent in July, compared to the same month last year, as the government continued to spend more than it brings in.

“July is often the month when the government books a tidy surplus and that’s what economists and the OBR had expected.

“Despite the increased take from VAT, Corporation Tax, NI contributions and Income Tax, pressures including increased benefit spend and debt interest costs gobbled away all the extra cash and a bit more.”

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