UK government borrowing reaches 24.5 billion pounds as debt costs rise

The United Kingdom Treasury recorded a higher than expected budget deficit of 24.5 billion pounds in September 2026. Guardian Business and AOL.co.uk both reported that rising inflation increased the interest paid on government debt. This expansion in public borrowing increases financial pressure on Chancellor of the Exchequer John Healey ahead of his budget. [1][2][4]

Official figures show the British government paid 10.9 billion pounds in debt interest during September, according to Guardian Business. This represents the highest September debt interest figure since records began. It is only the eighth time that the monthly debt interest cost has exceeded 10 billion pounds. Guardian Business reported that some government bonds are directly linked to the retail prices index measure of inflation. [1]

Healey has served as Chancellor of the Exchequer since 2026 and has been a Labour Member of Parliament since 1997. As FTMQ Business reported earlier, UK inflation reached 3.5 percent in September, rising from 3.1 percent in August due to higher fuel costs. That earlier report confirmed the monthly government deficit reached 24.5 billion pounds, exceeding expectations from City analysts. [1][4][6]

The rising borrowing costs arrive as Healey prepares his autumn budget, according to Guardian Business and Birmingham Live. Birmingham Live reported that the budget plans will include confirmed HMRC capital gains tax measures. Higher debt interest expenses reduce the financial flexibility for the Treasury when setting national tax and spending policies. [1][3]