Public sector finances, UK: February 2025

• Borrowing - the difference between total public sector spending and income - was £10.7 billion in February 2025; this was £0.1 billion more than in February 2024 and the fourth highest February borrowing since monthly records began in 1993.

• The current budget deficit - borrowing to fund day-to-day public sector activities - was £3.3 billion in February 2025; this was £1.0 billion less than in February 2024 and the lowest February deficit since 2022.

• Borrowing in the financial year to February 2025 was £132.2 billion; this was £14.7 billion more than at the same point in the last financial year and the third highest financial year-to-February borrowing since monthly records began in 1993.

• In October 2024, the Office for Budget Responsibility (OBR) forecast that the public sector would borrow £127.5 billion for the whole of the financial year ending March 2025; an updated OBR forecast will be published on 26 March 2025.

• Public sector net debt excluding public sector banks was provisionally estimated at 95.5% of gross domestic product (GDP) at the end of February 2025; this was 0.1 percentage points more than at the end of February 2024 and remains at levels last seen in the early 1960s.

• Public sector net financial liabilities excluding public sector banks were provisionally estimated at 82.9% of GDP at the end of February 2025; this was 2.3 percentage points more than at the end of February 2024, but 12.6 percentage points less than for public sector net debt.

• Central government net cash requirement (excluding UK Asset Resolution Ltd and Network Rail) was £8.4 billion in February 2025; this was £0.2 billion less than in February 2024.

Initial estimates show that the public sector spent more than it received in taxes and other income in February 2025, requiring it to borrow £10.7 billion.

This was £0.1 billion more borrowing than in February 2024. It is also the fourth highest February borrowing since monthly records began in 1993, behind February borrowing in 2009, 2021, and 2023.  

In October 2024, the Office for Budget Responsibility forecast that borrowing in February 2025 would be £6.5 billion. This was £4.2 billion less than our provisional estimate.

Public sector borrowing includes two broad components: the current budget and net investment.

The current budget, which is usually in deficit, can be considered as borrowing to fund day-to-day public sector activities. Initial estimates show that in February 2025, the current budget was in deficit by £3.3 billion. This was £1.0 billion less than in February 2024 and the lowest February deficit since 2022.

The public sector's net (capital) investment was £7.4 billion in February 2025, which was £1.1 billion more than in February 2024.

A breakdown of net borrowing by subsector and a summary of central government receipts and expenditure data are presented in Tables 1 to 3 in our Public sector finances summary tables: Appendix M dataset.

Central government borrowing

Central government forms the largest part of the public sector and includes government departments such as HM Revenue and Customs (HMRC), the Department of Health and Social Care, the Department for Work and Pensions, the Department for Education, and the Ministry of Defence, as well as other government agencies.

The relationship between central government's receipts and expenditure is an important determinant of public sector net borrowing. Central government borrowed £5.4 billion in February 2025. This is around half of the £10.7 billion borrowed by the whole public sector.

Central government current receipts

Central government's receipts were £87.7 billion in February 2025, £3.2 billion more than in February 2024. Of this £3.2 billion increase in income:

• central government tax receipts increased by £3.7 billion to £67.2 billion; this included increases of £2.8 billion in Income Tax, £0.7 billion in Value Added Tax (VAT), and £0.3 billion in Corporation Tax receipts

• compulsory social contributions decreased by £0.8 billion to £14.4 billion

A detailed breakdown of central government income is presented in our Public sector current receipts: Appendix D dataset.

Self-assessed tax receipts

Payments of self-assessed (SA) tax receipts made close to or after the January deadline take time to appear in administrative data. This means that the proportion of self-assessed taxes recorded in January and February can vary year on year. We advise users to consider these two months together when making annual comparisons.

• SA Income Tax receipts in February decreased by £0.4 billion to £3.3 billion, compared with a year earlier; this brings the total for January and February 2025 to £29.8 billion, which is £4.3 billion more than in the same two months in 2024 

• SA Capital Gains Tax receipts in February decreased by £0.6 billion to £1.3 billion, compared with a year earlier; this brings the total for January and February 2025 to £10.8 billion, which is £1.7 billion less than in the same two months in 2024

Further detail is available in HMRC tax receipts and National Insurance contributions for the UK bulletin on the GOV.UK website.

Central government current expenditure

Central government spending data for February 2025 are provisional. There is uncertainty around these estimates until more detailed departmental information becomes available over time.

Central government's total expenditure was £93.0 billion in February 2025, £3.8 billion more than in February 2024. Of this overall £3.8 billion increase in spending:

• central government departmental spending on goods and services increased by £2.9 billion to £36.6 billion, as pay rises and inflation increased running costs

• payments to support the day-to-day running of local government increased by £0.6 billion to £10.2 billion; these intra-government transfers are both central government spending and a local government receipt, so they have no effect on overall public sector borrowing

• central government net investment was £5.9 billion in February 2025, £0.7 billion more than in February 2024

• net social benefits paid by central government decreased by £0.9 billion to £24.1 billion, where the absence of one-off cost-of-living payments made in February last year was greater than the annual uprating of benefits

Borrowing in other subsectors

Our Public sector finances borrowing by subsector: Appendix R dataset gives more information on data presented in Table 1, including transactions related to borrowing by each subsector and their contribution to total public sector borrowing in a matrix table format. The time period presented in the matrix table can be changed using the drop-down box feature.

Interest payable on central government debt

The interest payable on central government debt was £7.4 billion in February 2025, equal to that of February 2024.

The interest payable on index-linked gilts rises and falls with the Retail Prices Index (RPI), adding volatility to central government debt interest costs. This additional RPI inflation-linked interest is described as "capital uplift" and affects the value of the gilt principal.

Capital uplift was £1.9 billion in February 2025, largely reflecting the 0.3% increase in the RPI between November and December 2024. This increased the capital uplift on the three-month lagged index-linked gilts make up around 95% of the index-linked gilt stock, as described by the UK Debt Management Office.

Figure 2 shows this series as the top, light blue portion of each stacked bar. It excludes the uplift payable at the time of an index-linked gilt redemption. These redemption payments are already recorded as accrued interest payable across the life of each index gilt.

For further details of our approach, see our Calculation of interest payable on government gilts methodology.

Monthly receipts and expenditure figures can be volatile. The year-to-date position provides a better indicator of progress against previous years and the forecast.

The public sector spent more than it received in taxes and other income in the financial year (FY) to February 2025. Initial estimates show it borrowed £132.2 billion. This was £14.7 billion more than in the FY to February 2024.

This was the third highest FY to February borrowing since monthly records began in 1993. This is behind the equivalent 11-month period of the FY to February 2021 during the coronavirus (COVID-19) pandemic, and the FY to February 2010 following the global financial downturn.

Borrowing in the FY to February 2025 was £20.4 billion more than the £111.8 billion forecast by the Office for Budget Responsibility (OBR) in October 2024. Of this, central government and local government borrowing were £13.6 billion and £5.4 billion, respectively, above OBR forecast amounts.

Within public sector borrowing in the FY to February 2025, the current budget deficit was £70.6 billion. This is £4.7 billion more than in the same period a year ago.

Public sector net investment increased by £10.0 billion to £61.6 billion for the same 11-month period.

A breakdown of net borrowing by subsector and a summary of central government receipts and expenditure data are presented in Tables 1 to 3 in our Public sector finances summary tables: Appendix M dataset.

The public sector (excluding public sector banks) borrowed £132.2 billion in the FY to February 2025. Of this, central government borrowed £139.0 billion. This larger central government borrowing was partially offset by a £16.4 billion Bank of England (BoE) surplus and balanced by remaining subsectors. 

Borrowing of both subsectors was affected by payments totalling £36.3 billion made by central government to the BoE in this period under its Asset Purchase Facility (APF) Fund indemnity agreement. As with similar intra-public sector transactions, these payments are public sector borrowing neutral. They increased central government's borrowing by £36.3 billion in the FY to February 2025, but reduced the borrowing impact of the BoE by an equal and offsetting amount.

Central government current receipts

Central government's current receipts were £941.0 billion in the FY to February 2025, £34.3 billion more than in the same period last year. Of this £34.3 billion increase in income:

• central government tax receipts increased by £39.8 billion to £721.5 billion, with increases in Income Tax, Corporation Tax, and Value Added Tax (VAT) receipts of £25.2 billion, £4.6 billion, and £4.2 billion, respectively

• compulsory social contributions decreased by £8.3 billion to £154.5 billion, largely because of the reductions in the main rates of National Insurance in early 2024

A detailed breakdown of central government income is presented in our Public sector current receipts: Appendix D dataset.

Central government current expenditure

Central government's total expenditure was provisionally estimated as £1,080.0 billion in the FY to February 2025, £41.7 billion more than in the same 11-month period a year ago. Of this overall £41.7 billion increase in spending:

• central government departmental spending on goods and services increased by £25.9 billion to £395.7 billion, as pay rises and inflation increased running costs

• net social benefits paid by central government increased by £12.2 billion to £280.1 billion, largely caused by inflation-linked increases in many benefits

• payments to support the day-to-day running of local government increased by £9.8 billion to £131.3 billion; these intra-government transfers have no impact on overall public sector borrowing (PSNB ex)

• interest payable on central government debt increased by £0.8 billion to £80.8 billion, largely because the interest payable on index-linked gilts rises and falls with the Retail Prices Index (RPI)

• net current grants abroad decreased £4.9 billion to £7.1 billion, largely because of smaller net payments made to the EU

• subsidies paid by central government decreased by £3.2 billion to £26.5 billion, largely because of the closure of the energy support schemes that were active until June 2023

Central government net investment

Central government net investment in the FY to February 2025 was £99.6 billion, £2.7 billion less for the same period a year ago. This £99.6 billion includes £36.3 billion in regular payments from HM Treasury to the BoE APF Fund. These intra-public sector transfers have no impact on overall public sector borrowing (PSNB ex).

Local government

Initial estimates suggest that local government borrowing was £12.3 billion in the 11 months to February 2025. This was £0.3 billion lower than in the same period a year earlier. Our provisional monthly estimates for the UK are currently based on published budget data for England, Scotland and Wales, with estimates included for Northern Ireland.

The public sector borrowed £131.1 billion in the financial year ending (FYE) March 2024. This was £3.6 billion more than the £127.4 billion borrowed in FYE March 2023, and £9.2 billion more than the £121.9 billion forecast by the Office for Budget Responsibility.

Our Public sector finances borrowing by subsector: Appendix R dataset presents public sector borrowing in a matrix table format. It provides a summary by transaction for each of the subsectors. The time period presented in the matrix table can be changed using the drop-down box feature.

Expressing borrowing as a ratio of gross domestic product (GDP) - the value of everything produced in the UK economy in a 12-month period - gives an estimate of its affordability and provides a more thorough and reliable measure for comparison of the UK's fiscal position over time.

Our current estimate for the total borrowed in the financial year ending (FYE) March 2024 as a ratio of GDP was 4.8%. This is 0.4 percentage points higher than our initial estimate of 4.4% published in our March 2024 release.

We describe the methodology used for the presentation of our GDP ratios in our The use of GDP in public sector fiscal ratio statistics methodology.

The public sector balance sheet describes its financial position at a point in time. It shows its liabilities (amounts owed) and its assets (amounts owned).

There are several measures of the public sector balance sheet that we discuss in our What the UK government owns and what it owes blog.

Table 3 presents the narrowest balance sheet measure, which is the redemption value of central government gilts. It then builds on this measure, widening coverage by both the subsector and the range of asset and liability types included, to reach the far wider measure of public sector net worth. We explain this measure in our Wider measures of the public sector balance sheet: public sector net worth methodology.

Our Public sector balance sheet tables: Appendix N dataset presents a detailed reconciliation between the balance sheet measures summarised in Table 3.

Public sector net debt

Public sector net debt excluding public sector banks (PSND ex) is the most widely used balance sheet measure used to describe the UK public sector's financial position at a point in time. Expressing net debt as a ratio of gross domestic product (GDP) gives an estimate of its affordability and provides a more thorough and reliable measure for comparison of the UK's fiscal position over time.

The net debt-to-GDP ratio at the end of February 2025 was provisionally estimated at 95.5%, 0.1 percentage points higher than a year ago. However, this is a highly provisional estimate. It is likely to be revised in future publications because it partly relies on GDP estimates based on the October 2024 Office for Budget Responsibility forecast. Our blog explains why our estimates of the debt to GDP ratio are susceptible to revision.

Public sector net debt excluding the Bank of England (BoE) was £2,618.1 billion at the end of February 2025, or around 89.4% of GDP. This was £177.7 billion, or 6.1 percentage points of GDP, less than the wider measure of net debt (including the BoE). This difference was largely a result of the BoE's quantitative easing activities, including the gilt-purchasing activities of the Asset Purchase Facility (APF) Fund.

The APF Fund's gilt holding is not recorded directly as a component of public sector net debt. Instead, in February 2025, we recorded the £94.7 billion difference between the £645.7 billion of reserves created to purchase its gilts (at market value at the time of purchase) and their £551.0 billion redemption value. For details of the BoE's contribution to public sector net debt, see Table PSA9A of our Public sector finances tables 1 to 10: Appendix A dataset.

Public sector net financial liabilities

Public sector net financial liabilities excluding public sector banks (PSNFL ex) were £2,427.6 billion at the end of February 2025. This was equivalent to an estimated 82.9% of GDP. This was £170.9 billion, or 2.3 percentage points, more than at the end of February 2024.

PSNFL ex adds further assets and liabilities to those recorded in debt (PSND ex). These extra assets are currently valued at more than the extra liabilities. This means that PSNFL ex was 12.6 percentage points of GDP less than PSND ex, which stood at 95.5% of GDP at the end of February 2025.

We explain the financial assets and liabilities captured in PSNFL ex in our PSNFL methodology.

Additionally, we published a blog explaining the PSNFL measure, because it has been selected by the UK government as the reference for a balance sheet fiscal rule.

The additional financial assets and liabilities included in PSNFL ex that fall outside of the PSND ex boundary are not updated monthly. Instead, they are updated quarterly, or when data become available. These data were last updated on 21 March 2025.

A more detailed presentation of the public sector balance sheet is available in our Public sector net worth: Appendix O dataset, released on 21 March 2025.

The data for the latest months of every release contain a degree of forecasts. These are then replaced by improved estimates, as further data are made available, and finally by outturn data.

Tables 4 to 6 of our Public sector finances summary tables: Appendix M dataset compare our latest public sector finances data with those in our Public sector finances, UK: January 2025 bulletin, published on 21 February 2025. They highlight the revisions to borrowing by subsector, with additional detail for central government receipts and expenditure.

Our Public sector finance revisions analysis: Appendix P dataset records monthly borrowing data as at first and at subsequent publications, graphically illustrating any potential bias to our early estimates.

Value Added Tax

In our Public sector finances, UK: January 2025 bulletin, published on 21 February 2025, we advised that HM Revenue and Customs (HMRC) would be updating their estimates of Value Added Tax (VAT) cash receipts for the financial year ending (FYE) March 2023 and the FYE March 2024 to align them to their annual accounts. These changes have been included in this month's public sector finance dataset, with previously reported VAT cash receipts reduced in both of these financial years.

This update has increased public sector net borrowing in the FYE March 2023 and the FYE March 2024. Additionally, borrowing in the FYE March 2022 has been marginally reduced because of the timing adjustments applied to our cash receipts data. 

Total cash tax receipts paid by HMRC to HM Treasury are unaffected by this update and therefore, central government net cash requirement has not changed. Further briefing is available in the HMRC tax receipts and National Insurance contributions for the UK bulletin on the GOV.UK website.

Revisions to public sector net borrowing in the financial year to January 2025

We have increased our estimate of public sector net borrowing (PSNB ex) in the first ten months of the current financial year by £3.3 billion to £121.5 billion since publishing our January 2025 release.

Our previous estimate of central government borrowing has increased by £1.2 billion to include the latest source data. We have reduced our previous estimate of central government receipts by £0.8 billion and increased our estimate of total central government spending by £0.4 billion.

Tables 5 to 6 of our Public sector finances summary tables: Appendix M dataset present the revisions to our previously published estimates of central government receipts and spending by component.

Additionally, we have increased our previous provisional estimates of public corporations' and local government net borrowing by £1.6 billion and £0.6 billion, respectively, because of regular quarterly updates to our dataset.

Revisions to public sector net borrowing in the financial year ending March 2024

We have reduced our estimate of borrowing in the FYE March 2024 by £0.3 billion to £131.1 billion since publishing our January 2025 release.

Our previous estimate of central government borrowing has reduced by £0.7 billion to include the latest source data. We have reduced our previous estimate of central government receipts by £0.6 billion and reduced our estimate of total central government spending by £1.3 billion.

Of this reduction in receipts, we have reduced our previous estimate of VAT receipts by £0.5 billion and corporation tax receipts by £0.2 billion. We have reduced our previous provisional estimates of central government net investment by £1.3 billion. This is because of an update to our COVID-19 loan guarantee data, which has in turn reduced total central government spending.

Additionally, we have increased our previous estimate of public corporations' net borrowing in the FYE March 2024 by £0.4 billion because of our regular quarterly updates to our dataset.

Revisions to public sector net borrowing in the financial year ending March 2023

We have increased our estimate of borrowing in the FYE March 2023 by £4.2 billion to £127.4 billion since publishing our January 2025 release. This change was largely because of updates to our central government data.

We have reduced our previous estimate of central government receipts by £2.0 billion and increased our estimate of total central government spending by £2.1 billion.

Of this reduction in receipts, we have reduced our previous estimate of VAT receipts by £2.0 billion.

This month we have taken the opportunity align our central government spending data with that of the final central government audited accounts for the FYE March 2023. We have increased our previous estimate of central government net investment by £2.1 billion and in doing so, increased total central government spending.

Over the same 12-month period, there were several largely offsetting changes within current spending. Most notably, our estimate of spending on goods and services increased by £1.6 billion, while our previous estimate of subsidy payments reduced by £0.9 billion, with other changes making up the balance.

Revisions to public sector net debt at the end of January 2025

We have increased our estimate of debt (PSND ex) at the end of January 2025 by £2.8 billion to £2,780.6 billion since publishing our January 2025 release because of several regular data updates. The most notable factors affecting debt at the end of January 2025 were:

• regular updates to our central government data, including an annual update to our Pool Reinsurance Company Limited estimates, increasing central government net debt by a total of around £1.5 billion

• monthly updates to our Bank of England data, increasing its contribution to net debt by around £0.9 billion

• a quarterly update to our local government data, increasing local government net debt by around £0.9 billion

• a quarterly update to our public non-financial corporations' data, decreasing their contribution to net debt by around £0.4 billion

Revisions to public sector net financial liabilities at the end of January 2025

We have reduced our estimate of public sector net financial liabilities (PSNFL ex) at the end of January 2025 by £2.3 billion to £2,409.6 billion since publishing our January 2025 release. This reduction was a combination of:

• a £2.8 billion increase to our previous estimation of net debt

• a £3.9 billion increase to our previous estimation of other financial liabilities that fall outside of the definition of net debt

• a £9.0 billion increase to our previous estimation of illiquid financial assets

This month, we updated our initial estimates of other financial liabilities (including accounts payable relating to winter fuel payments) and illiquid assets (largely accounts receivable relating to tax and social contributions data).

Public sector

In the UK, the public sector consists of six subsectors: central government, local government, public non-financial corporations, public sector funded pensions, the Bank of England (BoE) and public financial corporations (including public sector banks). The figures presented in this release exclude public sector banks unless otherwise noted.

The NatWest Group, the only remaining public sector bank, was reclassified to the private sector as of June 2024.

Public sector current budget deficit

Public sector current budget deficit (PSCBD) is the gap between current expenditure and current receipts on an accruals basis, having taken account of depreciation. PSCBD is effectively an estimate of borrowing to fund day-to-day public sector activities and is the reference statistic used for a UK government fiscal rule.

The current budget is in surplus when receipts are greater than expenditure and is indicated with a negative sign.

Public sector net borrowing

Public sector net borrowing (PSNB) is the gap between total expenditure and current receipts on an accruals basis. If receipts exceed expenditure, this is referred to as a surplus and is indicated with a negative sign. Borrowing is often referred to by commentators as "the deficit".

Public sector current budget deficit and net borrowing are measured on an accruals basis, where transactions for income are recorded when earned and expenses are recorded when incurred, rather than when the bills are paid (on a cash basis). 

Central government net cash requirement

The central government net cash requirement (CGNCR) represents the cash needed to be raised from the financial markets over a period to finance its activities. The amount of cash required will be affected by changes in the timing of payments to and from the public sector, rather than when these liabilities were incurred.

Public sector net debt

Public sector net debt (PSND), often referred to by commentators as "the national debt", represents the amount of money the public sector owes to the private sector and overseas (in the form of loans, debt securities, deposit holdings and currency), net of liquid financial assets held.

Public sector net financial liabilities

Public sector net financial liabilities (PSNFL) is a wider measure of the balance sheet than public sector net debt and includes all financial assets and liabilities recognised in the national accounts. PSNFL is the reference statistic used for a UK government fiscal rule and is sometimes referred to as "net financial debt".

Broadening the PSNFL measure to include the public sector's non-financial assets provides public sector net worth (PSNW), our widest balance sheet measure.

Methodology guides

To supplement this release, we publish an accompanying methodological guide and quality and methodology information (QMI) outlining the strengths, limitations, and appropriate uses of government finance statistics.

We also explain the recording of interest payable to holders of UK government gilts in the UK public sector finances in our Calculation of interest payable on government gilts methodology and our Use of gross domestic product (GDP) in public sector fiscal ratio statistics methodology.

Accredited official statistics

Public sector net borrowing, cash requirement and debt are accredited official statistics. These accredited official statistics were independently reviewed by the Office for Statistics Regulation in June 2017. They comply with the standards of trustworthiness, quality, and value in the Code of Practice for Statistics and should be labelled "accredited official statistics".

Official statistics

Public sector net financial liabilities and public sector net financial worth are both official statistics. These measures were introduced after June 2017, and so have not yet been reviewed by the Office for Statistics Regulation. 

Official statistics in development

Public sector net worth is labelled as "official statistics in development". Until October 2023, these were called "experimental statistics". Read more about the change in our Guide to official statistics in development.

Tax receipts and social contributions

In the most recent months, tax receipts recorded on an accrued basis are subject to some uncertainty. This is because many taxes such as Value Added Tax (VAT), Corporation Tax, and Pay As You Earn (PAYE) Income Tax contain some forecast cash receipts data and are liable to revision when actual cash receipts data are received.

The forecasts underlying our current tax estimates reflect the expectations published in the Office for Budget Responsibility's (OBR's) Economic and fiscal outlook - October 2024 report.

Changes to National Insurance contributions

The UK government announced changes to the National Insurance contributions paid by employers in the Autumn Budget 2024. This change comes into effect from 6 April 2025.

Support payments to Ukraine

On 1 March 2025, the Chancellor of the Exchequer announced a £2.26 billion aid package to Ukraine under the G7 Extraordinary Revenue Acceleration (ERA) scheme. Initial loans under the ERA will be provisionally recorded in our Public sector finances: March 2025 release publishing on 23 April 2025, pending a formal classification decision.

Local government

Local government data for the financial year ending (FYE) March 2025 are provisional estimates for the UK. They are largely based on published budget data for England, Scotland and Wales, with estimates included for Northern Ireland.

In recent years, planned local government expenditure initially reported in local authority budgets has been systematically lower than final outturn current expenditure reported in the audited accounts, and generally higher than that reported in final outturn capital expenditure. Therefore, we may include adjustments to increase or decrease the amounts reported at the budget stage.

For FYE March 2024, we include a £0.5 billion downward adjustment to Scotland's capital expenditure.

For FYE March 2025, we include a £3.0 billion upward adjustment to England's current expenditure.

To reflect the most recently available data for housing benefits, we have applied further downward adjustments to budget data for current expenditure on benefits of £0.2 billion in FYE 2024 and £1.4 billion in FYE 2025.

Public corporations

Data for public corporations in FYE 2024 and FYE 2025 are largely based on the OBR's Economic and fiscal outlook - October 2024 report, and are supplemented by in-year estimates for train operating companies, the Housing Revenue Account, and surveyed public corporations.

Comparing our data with official forecasts

The independent OBR is responsible for the production of official forecasts for the UK government. These forecasts are usually produced twice a year, in spring and autumn. The latest forecast was published in the OBR's Economic and fiscal outlook - October 2024 report. The next OBR forecast will be published on 26 March 2025.