Public sector finances, UK: March 2024

• Borrowing – the difference between public sector spending and income – was £11.9 billion in March 2024, £4.7 billion less than in March last year.

• Borrowing in the financial year ending (FYE) March 2024 was provisionally estimated at £120.7 billion, £7.6 billion less than in the same twelve-month period a year ago but £6.6 billion more than forecast by the Office for Budget Responsibility (OBR).

• Compared with the annual value of the UK’s economy, borrowing in the FYE March 2024 was provisionally estimated at 4.4% of the UK’s gross domestic product (GDP), 0.6 percentage points less than in the same twelve-month period a year ago.

• The current budget deficit in the FYE March 2024 was provisionally estimated at 1.9% of GDP, 1.3 percentage points less than in the FYE March 2023.

• Public sector net debt excluding public sector banks (debt) at the end of March 2024 was provisionally estimated at 98.3% of GDP; this was 2.6 percentage points more than at the end of March 2023, and remains at levels last seen in the early 1960s.

• Excluding the Bank of England, debt was 89.4% of GDP, 8.9 percentage points lower than the wider debt measure.

• Public sector net worth excluding public sector banks was in deficit by £709.3 billion at the end of March 2024, a £95.8 billion larger deficit than at the end of March 2023.

• Central government net cash requirement (excluding UK Asset Resolution Ltd and Network Rail) was £28.3 billion in March 2024, £3.2 billion more than in March 2023, and brings the total for the FYE March 2024 to £158.8 billion.

Each April we change the focus of this section from the latest month to the first estimate of latest financial year.

The public sector spent more than it received in taxes and other income in March 2024, requiring it to borrow £11.9 billion. This was £4.7 billion less than in March 2023.

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 HM Revenue and Customs, the Department of Health and Social Care, the Department for Education, and the Ministry of Defence.

The relationship between central government’s receipts and expenditure is an important determinant of public sector borrowing. In March 2024, central government borrowed £11.9 billion, £7.0 billion less than in March 2023.

Central government receipts

Central government’s receipts were £90.6 billion in March 2024, £6.6 billion more than in March 2023. Of this £6.6 billion increase in revenue:

• central government tax receipts increased by £6.0 billion to £68.1 billion, with increases in Income Tax, Corporation Tax and Value Added Tax (VAT) receipts of £3.1 billion, £1.5 billion and £0.8 billion respectively

• compulsory social contributions (largely National Insurance contributions) increased by £0.1 billion to £17.4 billion

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

Central government expenditure

Central government’s total expenditure was £102.5 billion in March 2024, £0.4 billion less than in March 2023. Of this £0.4 billion decrease in spending:

• net social benefits paid by central government increased by £3.5 billion to £23.7 billion, largely because of inflation-linked benefits uprating.

• central government departmental spending on goods and services increased by £2.2 billion to £36.2 billion, as inflation increased running costs

• interest payable on central government debt increased by £0.4 billion to £2.5 billion, largely because the interest payable on index-linked gilts rises and falls with the Retail Prices Index

• subsidies paid by central government reduced by £5.5 billion to £2.4 billion, largely because of the cost of the Energy Price Guarantee (for households), as explained on GOV.UK, and the Energy Bill Relief Scheme (for businesses), as explained in GOV.UK guidance, affecting this month the previous year

• payments recorded under central government “other current grants” reduced by £2.4 billion to £1.6 billion, largely because of the cost of the previous year’s Energy Bills Support Scheme, as explained on GOV.UK, when six relief payments were made directly to households monthly between October 2022 and March 2023, affecting this month the previous year

Interest payable on central government debt

In March 2024, the interest payable on central government debt was £2.5 billion.

The large month-on-month increases in the Retail Prices Index (RPI) since early 2021 led to substantial increases in debt interest payable, with the largest three months on record occurring in 2022 and 2023. The additional interest caused by RPI inflation is described as “‘capital uplift” and affects the value of the gilt principal.

Capital uplift was negative in March 2024, with a reduction of £1.6 billion reflecting the 0.3% decrease in the RPI between December 2023 and January 2024. This decreased the capital uplift on the three-month lagged index-linked gilts (as shown on the UK Debt Management Office website), which make up around three-quarters of the index-linked gilt stock.

A monthly time series of the total capital uplift on the index-linked gilts in issue is available as series identifier code MW7L. In addition to the regular RPI uplift, this series also includes the uplift paid at the time of an index-linked gilt redemption. These redemption payments are recorded as accrued interest payable across the life of an index gilt (so are already recorded within series NMFX) and are deducted from series MW7L in our Figure 2 presentation.

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

Our first estimate for the total borrowed in the financial-year-ending (FYE) March 2024 is £120.7 billion. This reflects the £11.9 billion borrowed in March 2024, as well as an upward revision of £1.9 billion to our previously published financial year-to-February 2024 borrowing estimate.

This was £7.6 billion less borrowing than in the FYE 2023 and around a third of that borrowed in the FYE 2021, during the coronavirus (COVID-19) pandemic.

Public sector borrowing consists of two broad components: the current budget deficit (or borrowing to fund day-to-day activities) and net investment (capital expenditure).

In FYE March 2024, the public sector current budget deficit was £51.1 billion, £31.2 billion less than in FYE March 2023.

Compared with the annual value of the UK’s economy, borrowing in the FYE March 2024 was provisionally estimated at 1.9% of the UK’s gross domestic product (GDP), 1.3 percentage points less than in FYE March 2023.

Of the £120.7 billion borrowed by the public sector (excluding public sector banks) in the FYE 2024, central government borrowed £140.6 billion. This was partially offset by a £20.6 billion Bank of England (BoE) surplus and balanced by remaining subsectors.

The borrowing of both subsectors is affected by payments totalling £44.4 billion made by central government to the BoE over the last twelve months under its Asset Purchase Facility Fund (APF) indemnity agreement.

As with similar intra-public sector transactions, these payments are public sector borrowing neutral. They increase central government’s borrowing by £44.4 billion compared with the same period the previous year but reduce the borrowing impact of the BoE by an equal and offsetting amount.

Central government receipts

In the FYE 2024, central government’s income was £997.7 billion, an increase of £57.6 billion compared with FYE 2023. Of this £57.6 billion increase in revenue:

• central government tax receipts increased by £52.6 billion to £756.7 billion, with Income Tax, Corporation Tax and Value Added Tax (VAT) receipts increasing by £24.6 billion, £16.3 billion, and £10.3 billion, respectively

• compulsory social contributions (largely National Insurance contributions) increased by £0.9 billion to £179.5 billion

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

Central government expenditure

This increase in income was exceeded by a £71.8 billion increase in total expenditure, which rose to £1,138.3 billion over the same twelve-month period. Of this £71.8 billion increase in spending:

• net investment spending increased by £58.0 billion to £121.7 billion, largely because of a £39.4 billion increase in payments to the APF (which reduce BoE borrowing) and a £10.0 billion capital receipt from the household sector in December 2022 caused by an exceptional update to the value of the UK government’s student loans book

• net social benefits paid by central government increased by £36.9 billion to £291.4 billion, largely because of inflation-linked benefits uprating and cost-of-living payments (explained in GOV.UK guidance)

• central government departmental spending on goods and services increased by £33.8 billion to £406.4 billion, as inflation increased running costs

• subsidies paid by central government reduced by £21.1 billion to £32.3 billion, largely because of the reduction in energy support costs, the bulk of which were paid between October 2022 and June 2023

• payments recorded under central government “other current grants” reduced by £16.8 billion to £20.6 billion, partly because a Cost-of-Living Council Tax Rebate (of £3.2 billion) paid to households during April 2022 and partly because of energy support payments made to households (of £1.9 billion a month) during the second half of the financial year ending March 2023

• interest payable on central government debt reduced by £29.3 billion to £78.3 billion, largely because of a slowing of the month-on-month growth in the Retail Prices Index

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

Our article, The use of gross domestic product (GDP) in public sector fiscal ratio statistics, describes the methodology used for the presentation of our GDP ratios.

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 upon 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, which we explain in our Wider measures of the public sector balance sheet: public sector net worth methodology.

Our Public sector balance sheet tables: Appendix N presents a detailed reconciliation between the balance sheet measures summarised in Table 2.

Public sector net debt

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

The net debt-to-GDP ratio at the end of March 2024 was provisionally estimated at 98.3%, 2.6 percentage points higher than a year ago. However, this is a highly provisional estimate and is likely to be revised in future publications because it partly relies on GDP estimates based on the March 2024 Office for Budget Responsibility forecast.

Public sector net debt excluding the Bank of England (BoE) was £2,448.3 billion at the end of March 2024, or around 89.4% of GDP, £245.9 billion (or 8.9 percentage points of GDP) less than the wider measure. This difference is largely a result of the BoE’s quantitative easing activities, including the gilt-purchasing activities of the Asset Purchase Facility (APF) Fund.

The APF’s gilt holding is not recorded directly as a component of public sector net debt. Instead, in March 2024, we record the £102.7 billion difference between the £728.0 billion of reserves created to purchase its gilts (at market value at the time of purchase) and their £625.4 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 worth

Public sector net worth excluding public sector banks (PSNW ex) was in deficit by £709.3 billion at the end of March 2024. This compares with a £613.5 billion deficit at the end of March 2023.

The main reason for the £95.8 billion reduction in PSNW ex over the last 12 months was a £154.5 billion increase in PSND ex, partly offset by a £50.3 billion increase in public sector non-financial assets.

If we exclude the public sector’s £1,595.7 billion of non-financial assets, public sector net financial worth excluding public sector banks (PSNFW ex) deteriorated by £146.1 billion over the same period to a deficit of £2,305.0 billion.

PSNFW ex is equivalent to public sector net financial liabilities excluding public sector banks (PSNFL ex), shown in Table 2 but expressed with the reverse sign.

The data for the latest months of every release contain a degree of forecasts. Subsequently, these are 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: February 2024, published on 21 March 2024, and 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.

Revision to public sector net borrowing (PSNB ex) in the financial year-to-February 2024

Since publishing our Public sector finances, UK: February 2024, we have increased our estimate of borrowing in the financial year to February 2024 by £1.9 billion. This change was largely the result of updated central government data replacing our previous estimates.

This month we have increased our previous estimates of central government tax receipts for the eleven months to February 2024 by £1.5 billion. In addition to reducing our previous estimate of income tax receipts by £1.0 billion and increasing our estimate of corporation tax receipts by £0.3 billion, we have updated our estimates for the UK government’s renewable energy price guarantee scheme Contracts for Difference (CfD) for the eleven months to February 2024 in line with the latest Office for Budget Responsibility (OBR) forecast.

This update to CfD is borrowing-neutral, with both tax receipts received and subsidies paid by central government under the CfD scheme increasing by £2.5 billion. This larger-than-usual revision to CfD was because of the recent uncertainty around energy prices and reflects the reduction in energy prices over the winter period. Our provisional CfD estimates will be replaced by published final data when available.

The increase in subsidy payments associated with the updated CfD data combined with a £0.7 billion increase to our previous estimate of debt interest payable and other small changes has led to an overall increase of £3.3 billion to central government current expenditure in the financial year to February 2024.

Revision to public sector net debt (PSND ex) at the end of February 2024

Since publishing our Public sector finances, UK: February 2024 bulletin, we have increased our estimate of debt at the end of February 2024 by £7.3 billion to £2,666.8 billion.

This change was largely because of updates to our Network Rail and Bank of England Asset Purchase Facility Fund data, which are reported one month in arrears.

Revisions to gross domestic product

Since publishing our Public sector finances, UK: February 2024 bulletin, we have increased our estimate of debt (PSND ex) expressed as a ratio of gross domestic product (GDP) at the end of February 2024 by 0.4 percentage points, from 97.1% to 97.5% of GDP.

This change was largely because of routine quarterly updates to GDP published in the GDP quarterly national accounts, UK: October to December 2023 on 28 March 2024. These updates have replaced our previous estimates.

Our blog, How the ONS estimates UK debt to GDP figures, explains why our estimates of GDP ratios are susceptible to revision.

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 (or public sector banks). The figures presented in this release exclude public financial corporations unless otherwise noted.

Public sector current budget deficit

Public sector current budget deficit (PSCB) is the gap between current expenditure and current receipts on an accruals basis, having taken account of depreciation. 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 revenue 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) 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 debt is often referred to by commentators as “the national debt”.

Public sector net financial liabilities

Public sector net financial liabilities (PSNFL) are a wider measure of the balance sheet than public sector net debt and includes all financial assets and liabilities recognised in the national accounts.

Public sector net worth

Public sector net worth (PSNW) is the widest measure of the balance sheet, broadening the PSNFL measure by considering the public sector’s non-financial assets.

Comparing our data with official forecasts

The independent Office for Budget Responsibility (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 – March 2024 report.

Each month on the same day as the Office for National Statistics (ONS) release, the OBR publishes a brief analysis of the latest public sector finances in its Monthly public finances release. Additionally, the OBR have published an article providing A brief guide to the public finances.

Public sector banks

Unless otherwise stated, the figures quoted in this bulletin exclude public sector banks, currently only the NatWest Group (NWG), formerly the Royal Bank of Scotland (RBS) Group.

The reported position of debt, and to a lesser extent borrowing, would be distorted by the inclusion of NWG’s balance sheet (and transactions). This is because the government does not need to borrow to fund the debt of NWG, nor would surpluses achieved by NWG be passed on to the government, other than through any dividends paid as a result of the government equity holdings.

Tax receipts

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 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 by the Office for Budget Responsibility (OBR) in their Economic and fiscal outlook – November 2023 report. We will update our estimates to reflect the OBR’s Economic and fiscal outlook – March 2024 report in our 22 May 2024 publication.

Local government and public corporations

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 higher than that reported in final outturn capital expenditure. We therefore include adjustments to increase or decrease the amounts reported at the budget stage.

For the financial year ending (FYE) 2024, we include:

• a £3.0 billion upward adjustment to England’s current expenditure on goods and services
• a £0.5 billion downward adjustment to Wales’s capital expenditure
• a £0.5 billion downward adjustment to Scotland’s capital expenditure

We apply a further £1.3 billion downward adjustment to budget data for current expenditure on benefits in the FYE 2024, to reflect the most recently available data for housing benefits.

Data for public corporations in the FYE 2023 and FYE 2024 remain largely based on the OBR’s Economic and fiscal outlook – November 2023 report, although supplemented by in-year data replacing previous estimates for train operating companies, the Housing Revenue Account and surveyed public corporations. We will update our estimates to reflect the OBR’s Economic and fiscal outlook – March 2024 report at the earliest opportunity.

Classification of the functions of government (COFOG)

On 23 April 2024, we published a breakdown of government spending on a Classification of the Functions of Government (COFOG) (PDF, 43.4KB) basis up to and including the calendar year 2022. ESA Table 11 splits expenditure into ten “functional” groups or subsectors of expenditures (such as defence, education and social protection) for both central and local government, and consolidates them together to form general government.

• Central government annual expenditure: ESA Table 11
• Local government annual expenditure: ESA Table 11
• General government annual expenditure: ESA Table 11