Public sector finances, UK: May 2024

• Borrowing – the difference between public sector spending and income – was £15.0 billion in May 2024, £0.8 billion more than in May 2023 and the third highest May borrowing since monthly records began in 1993.

• Borrowing in the financial year-to-May 2024 was £33.5 billion, £0.4 billion more than in the same two-month period a year earlier and the fourth highest year-to-May borrowing since monthly records began.

• Public sector net debt excluding public sector banks was provisionally estimated at 99.8% of gross domestic product (GDP) at the end of May 2024; this was 3.7 percentage points more than at the end of May 2023, and remains at levels last seen in the early 1960s.

• Excluding the Bank of England, debt was 91.3% of GDP, 5.3 percentage points more than at the end of May 2023 but 8.5 percentage points lower than the wider debt measure.

• Public sector net worth excluding public sector banks was in deficit by £725.7 billion at the end of May 2024, a £95.2 billion larger deficit than at the end of May 2023.

• Central government net cash requirement (excluding UK Asset Resolution Ltd and Network Rail) was £24.6 billion in May 2024, £7.6 billion more than in May 2023.

The public sector spent more than it received in taxes and other income in May 2024, requiring it to borrow £15.0 billion.

Though both public sector income and spending increased year-on-year, the increase in spending exceeded that of income.

Initial estimates for May 2024 suggest that borrowing was £0.8 billion (or 6.0 %) higher than May last year but £0.6 billion (or 4.2 %) lower than forecast by the Office for Budget Responsibility.

Borrowing in May 2024 was the third highest May borrowing since monthly records began in 1993, behind those of the coronavirus (COVID-19) pandemic in 2020 and 2021.

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 May 2024, central government borrowed £14.9 billion, £1.8 billion more than in May 2023.

Central government receipts

Central government’s receipts were £76.8 billion in May 2024, £1.0 billion more than in May 2023. Of this £1.0 billion increase in revenue:

• central government tax receipts increased by £2.0 billion to £58.6 billion, with increases in Income Tax, Corporation Tax and Value Added Tax (VAT) receipts of £0.6 billion, £0.4 billion and £0.3 billion, respectively

• compulsory social contributions decreased by £0.9 billion to £13.1 billion, largely because of the reductions in the main rates of National Insurance in 2024

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

Central government expenditure

Central government spending data for May 2024 are provisional. There is uncertainty around these estimates until more detailed departmental information becomes available later in the year.

Central government’s total expenditure was £91.6 billion in May 2024, £2.8 billion more than in May 2023. Of this £2.8 billion increase in spending:

• net social benefits paid by central government increased by £2.2 billion to £25.1 billion, largely because of inflation-linked benefits uprating

• central government departmental spending on goods and services increased by £0.7 billion to £35.2 billion, as inflation increased running costs

• payments to support the day-to-day running of local government increased by £0.7 billion to £11.5 billion; however, being both central government spending and a local government receipt, these intra-government transfers have no impact on overall public sector borrowing

• subsidies paid by central government decreased by £1.1 billion to £2.4 billion, largely because of the closure of the energy support schemes that remained active until June 2023

• interest payable on central government debt increased by £0.2 billion to £8.0 billion, largely because the interest payable on index-linked gilts rises and falls with the Retail Prices Index

Interest payable on central government debt

In May 2024, the interest payable on central government debt was £8.0 billion. This was the second highest May payable since monthly records began (for this component) in 1997, behind that of May 2022.

The large month-on-month increases in the Retail Prices Index (RPI) since early 2021 led to 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 £3.1 billion in May 2024, reflecting the 0.5% increase in the RPI between February and March 2024. This increased 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 capital uplift on the index-linked gilts in issue is available as series identifier code JNYY. This series is illustrated as the blue portion of each bar in Figure 2 and 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.

The £15.0 billion borrowed in May 2024, combined with a downward revision of £2.1 billion to our previously published April 2024 borrowing estimate, brings our provisional estimate for the total borrowed in the financial year-to-May 2024 to £33.5 billion. This was £0.4 billion more than was borrowed in the same two months last year, but £1.5 billion less than the £35.0 billion forecast by the Office for Budget Responsibility.

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.

Of the £33.5 billion borrowed by the public sector (excluding public sector banks) in the financial year-to-May 2024, central government borrowed £48.8 billion. This larger central government borrowing was partially offset by a £8.2 billion Bank of England (BoE) surplus and balanced by remaining subsectors.

The borrowing of both subsectors is affected by payments totalling £11.4 billion made by central government to the BoE in April 2024 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 £11.4 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

Central government’s receipts were £153.8 billion in the financial year-to-May, £1.8 billion more than in the same period last year. Of this £1.8 billion increase in revenue:

• central government tax receipts increased by £3.2 billion to £117.0 billion

• compulsory social contributions decreased by £2.3 billion to £25.9 billion, largely because of the reductions in the main rates of National Insurance in 2024

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

Central government expenditure

Central government spending data for the early part of the financial year is provisional, and there is uncertainty around these estimates until more detailed departmental information becomes available later in the year.

Central government’s total expenditure was £202.5 billion in the financial year-to-May 2024, £6.5 billion more than in May 2023. Of this £6.5 billion increase in spending:

• net social benefits paid by central government increased by £2.9 billion to £50.9 billion, largely because of inflation-linked benefits uprating

• central government departmental spending on goods and services increased by £3.2 billion to £69.0 billion, as inflation increased running costs

• payments to support the day-to-day running of local government increased by £2.2 billion to £27.4 billion; being both central government spending and a local government receipt, these intra government transfers have no impact on public sector borrowing

• subsidies paid by central government decreased by £2.5 billion to £4.7 billion, largely because of the closure of the energy support schemes that remained active until June 2023

• interest payable on central government debt decreased by £0.8 billion to £17.3 billion, largely because the interest payable on index-linked gilts rises and falls with the Retail Prices Index

• central government net investment increased by £1.5 billion to £21.2 billion, in part because of a regular payment of £11.4 billion from HM Treasury to the Bank of England APF Fund, which is public sector net borrowing neutral; however, these central government transactions do affect our public sector net borrowing excluding the Bank of England (PSNB ex BoE) measure

The public sector borrowed £122.1 billion in the financial year ending (FYE) March 2024. This was £5.8 billion less than the £127.9 billion borrowed in the FYE March 2023, but £8.0 billion more than the £114.1 billion forecast by the Office for Budget Responsibility (OBR).

This is our third provisional estimate of borrowing for the FYE March 2024.This estimate is £1.5 billion higher than our initial estimate of £120.6 billion, published in our March 2024 release.

Our borrowing estimate for the FYE March 2024 remains provisional; it is likely to be revised further over the coming months as we replace our provisional estimates of receipts and expenditure with finalised data.

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 the FYE March 2024, the public sector current budget deficit was £51.3 billion, £30.7 billion less than in the FYE March 2023, while net investment increased by £25.0 billion to £70.9 billion over the same 12-month period.

Expressing borrowing as a ratio of gross domestic product (GDP is the value of everything produced in the UK 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 third provisional estimate for the total borrowed in the financial year ending (FYE) March 2024 as a ratio of GDP is 4.5%, 0.1 percentage points higher than our initial estimate of 4.4% published in the March 2024 release.

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 4 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 May 2024 was provisionally estimated at 99.8%, 3.7 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 £2,507.4 billion at the end of May 2024, or around 91.3% of GDP, £235.4 billion (or 8.5 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 May 2024, we recorded the £102.7 billion difference between the £701.3 billion of reserves created to purchase its gilts (at market value at the time of purchase) and their £598.6 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.

As of April 2024, the APF no longer holds any corporate bonds, and this aspect of the scheme has closed.

Public sector net worth

Public sector net worth excluding public sector banks (PSNW ex) was in deficit by £725.7 billion at the end of May 2024. This compares with a £630.5 billion deficit at the end of May 2023.

The £95.2 billion reduction in PSNW ex over the last 12 months was largely because of a £172.2 billion increase in debt (PSND ex), partly offset by a £53.6 billion increase in public sector non-financial assets.

If we exclude the public sector’s £1,613.3 billion of non-financial assets, public sector net financial worth excluding public sector banks (PSNFW ex) deteriorated by £148.8 billion over the same period to a deficit of £2,339.0 billion.

Public sector net financial worth and public sector net financial liabilities are both official statistics, however public sector net worth is currently considered an official statistic in development (previously referred to as an experimental statistic).

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: April 2024 release, published on 22 May 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.

Revisions to public sector net borrowing in April 2024

Since publishing our Public sector finances, UK: April 2024 release, we reduced our estimate of borrowing (PSNB ex) in April 2024 by £2.1 billion to £18.4 billion. This change was largely the result of updated central government (CG) data replacing our previous estimates.

Our estimate of CG receipts remains largely unchanged from that published last month, reducing by £0.4 billion. This change was accompanied by an increase to our estimate of total CG spending of £0.8 billion spread across several spending categories, including current grants paid to local government (LG).

This increase to our previous estimate of payments from CG to LG of £1.7 billion, increased CG borrowing, but reduced LG borrowing by an equal and offsetting amount.

CG spending data for the early part of the financial year are largely provisional. There is a high degree of uncertainty around these estimates until more detailed departmental information becomes available later in the year.

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

This release presents the third provisional estimate of UK public sector finances for the financial year ending (FYE) March 2024; these are not final figures, and they will be revised over the coming months as we replace our initial estimates with provisional, and then final, outturn data.

Since publishing our Public sector finances, UK: April 2024 release, we increased our estimate of borrowing (PSNB ex) in the FYE March 2024 by £0.7 billion to £122.1 billion. This change was largely the result of updated LG and public corporations’ (PC) data replacing our previous estimates.

This month we increased our previous estimate of LG borrowing in the FYE March 2024 by £1.1 billion and reduced our previous estimate of PC borrowing by £0.6 billion.

Each quarter (March, June, September and December) we take the opportunity to supplement our monthly dataset with additional information compiled in the quarterly national accounts. This exercise often leads to large revisions in both our LG and PC data which are largely based on quarterly (rather than monthly) source data.

Our estimate of central government borrowing remains largely unchanged from that published last month, increasing by £0.2 billion. This change is spread across several receipt and spending categories with largely offsetting changes.

Revisions to public sector net debt at the end of April 2024

Since publishing our Public sector finances, UK: April 2024 release, our estimate of debt at the end of April 2024 increased by £6.3 billion to £2,693.8 billion.

This change was largely because of our regular quarterly updates to our LG and PC data. More specifically, we increased our estimate of loans by CG to LG at the end of April 2024 by £5.4 billion, to £127.9 billion, and reduced our estimate of the liquid assets held by PCs by £1.3 billion to £4.7 billion.

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), 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.

Unless otherwise noted, the debt figures quoted in this bulletin exclude public sector banks (PSND ex), while the UK government’s fiscal target is based on a measure that excludes both public sector banks and the Bank of England (PSND ex BoE). This is sometimes referred to as the “underlying debt”.

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.

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 has published an article providing A brief guide to the public finances.

UK government debt and deficit

In April 2024, we discontinued our UK government debt and deficit statistical bulletin, where we presented statistics for the general government sector. These are used for international comparisons and include central and local government data only.

The statistics will continue to be updated and published, with the latest data being made available from this release in the section called All data related to Public sector finances, UK: May 2024.

The International Monetary Fund (IMF) publishes a comparison for Group of Seven (G7) countries each April and October in its World Economic Outlook.

Sale of NatWest Group plc shares

The NatWest Group plc announced an agreement with HM Treasury for the sale of £1.2 billion of UK government owned shares on 31 May 2023. This is a financial transaction and, as with similar transactions, has no impact on borrowing.

Methodology guides

To supplement this release, we publish an accompanying methodological guide and Quality and Methodology Information outlining the strengths, limitations, and appropriate uses of government finance statistics.

In addition, we explain the recording of interest payable to holders of UK government gilts in the UK public sector finances in our articles The calculation of interest payable on government gilts (8 July 2022) and The use of gross domestic product (GDP) in public sector fiscal ratio statistics (21 September 2016).

Bank of England

In September 2021, our Recent and upcoming changes to public sector finance statistics: August 2021 article explained improvements to our estimates of the Bank of England’s contribution to our public sector measures.

In the coming months, we aim to include additional monthly data from the Bank of England which will replace further instances where published annual data are used. These more frequent data will be used to provide more precise monthly estimates of the contribution of the Bank of England to the PSF aggregates.

For more information on this development, see Section 2 of our Recent and upcoming changes to public sector finance statistics: May 2024 article.

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) Economic and fiscal outlook – March 2024 report.

Local government and public corporations

Local government and public corporations’ data for the financial year ending (FYE) March 2025 are initial estimates, largely based on the OBR’s Economic and fiscal outlook – March 2024 report, with adjustments being applied as needed.

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. We therefore include adjustments to increase or decrease the amounts reported at the budget stage.

For the FYE March 2024, we include:

• a £3.0 billion upward adjustment to England’s current expenditure on goods and services
• a £1.2 billion upward adjustment to England’s capital expenditure
• 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 £0.9 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 2024 is largely based on the OBR’s Economic and fiscal outlook – March 2024 report, supplemented by in-year estimates for train operating companies, the Housing Revenue Account and surveyed public corporations.