UK public borrowing reaches £1.8 billion in July, fiscal deficit continues to deviate from target, and cost-of-living relief measures increase debt demand

(1) KPMG UK's Senior Economist noted that UK government borrowing continues to deviate from expected trajectories, with the public sector’s net borrowing in July reaching approximately £1.8 billion, higher than the £1.1 billion recorded in the same period last year. Since the start of the current fiscal year in April, the gap between projected and actual borrowing has consistently remained around £2.3 billion. (2) Typically, personal income tax revenue in July is relatively strong, but this year it is still insufficient to bring public sector borrowing for the fiscal year back on track. The government’s pledged cost-of-living support measures may keep borrowing at elevated levels in the near term, while the market’s capacity and willingness to absorb additional debt have become relatively limited.