The UK government borrowed more than expected in November, with new figures revealing a significant gap between forecasts and reality despite a boost from tax revenues.
Borrowing Overshoots Amid Tax Revenue Spike
Fresh data from the Office for National Statistics (ONS) shows that public sector borrowing reached £11.7 billion last month. This figure exceeded the predictions of City analysts, who had anticipated borrowing would settle at around £10.2 billion for November.
However, there was a silver lining in the data. The November 2025 total represented the smallest borrowing figure for that month in four years. It also marked a reduction of £1.9 billion compared to November 2023.
Chief economist at the ONS, Grant Fitzner, pointed to higher tax takes as the primary reason for the year-on-year improvement. A notable contributor was a spike in national insurance receipts. This followed Chancellor Rachel Reeves' increase to employer contributions, which was announced in her 2024 Budget.
The Bigger Fiscal Picture Remains Challenging
Despite the monthly improvement, the broader financial year outlook presents a more concerning trend. Provisional estimates indicate that borrowing for the financial year through November 2025 has climbed above last year's levels.
Borrowing for the current fiscal year is now estimated at 4.4 per cent of gross domestic product (GDP). This represents a 0.1 percentage point rise compared to the same eight-month period in 2024.
Richard Carter, head of fixed interest research at Quilter Cheviot, offered a sobering analysis. "The good news for the UK economy is in short supply as the latest borrowing figures highlight," he said. Carter noted that since coming to power, the Labour government has been on a "borrowing binge" to plug gaps in public finances and fund spending.
Market Jitters and a Controversial Policy U-Turn
The borrowing data follows a turbulent period for UK fiscal policy. In October, public sector borrowing had surged to £17.4 billion, a significant pre-Budget setback. This helped push aggregate borrowing in the current financial year to £116.8 billion, nearly £10 billion above the Office for Budget Responsibility's (OBR) projection.
Markets were rattled in November by a cascade of leaks ahead of the Autumn Budget. Speculation mounted that Chancellor Reeves was preparing to increase income tax by 2p while cutting national insurance, a move seen as breaching a key manifesto pledge.
However, on 14 November, it was disclosed that Reeves had abandoned the income tax rise proposals. This policy reversal sent shockwaves through financial markets, with the yield on 10-year UK government bonds surging by 13 basis points. The government later claimed the U-turn was due to "better than expected" OBR forecasts, but this explanation drew criticism, with Reeves facing allegations of misleading the public.
In her final Autumn Budget, the Chancellor opted to maintain the freeze on income tax thresholds, a decision many critics argue still constitutes a tax rise for working people.
