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Public sector borrowing at HIGHEST level since Covid: "Britain is a basket case"

ended 20. June 2025

PUBLIC sector borrowing is at a record high level, apart from Covid, with experts sounding the alarm that “Britain is a basket case”.

Borrowing – the difference between total public sector spending and income – was £17.7 billion in May 2025, according to official data published this morning.

That's £0.7 billion more than in May 2024 and the second-highest May borrowing since monthly records began in 1993, after that of May 2020. 

Borrowing in the financial year to May 2025 was £37.7 billion - a total of £1.6 billion more than in the same two-month period of 2024 and the third-highest April to May borrowing since monthly records began, after those of 2020 and 2021. 

Newspage spoke to financial experts who are alarmed by the figures with fears investors will take their cash abroad and the Pound will be weakened.

Scott Gallacher, Director at Rowley Turton, simply said “we are in trouble”.

He added: “No growth, high inflation and rising debt. Britain is a basket case. Investors should look abroad to protect their portfolios.”

John Woolfitt, Director at Atlantic Capital Markets, said the figures are worse than expected.

He continued: "The figures highlight the continued challenging balancing act for the Treasury. Despite efforts to consolidate the public finances, consistent pressures from debt interest payments, welfare spending and the costs of public services are keeping borrowing levels high. 

"The data will fuel criticism of the government’s ability to bring the deficit under control. Markets anticipated a high borrowing figure, the worse-than-expected number could lead to upward pressure on UK gilt yields, particularly at the long end, as investors price in heavier issuance. 

“However, unless sustained or significantly revised upward, the reaction is likely to be muted. The numbers alone are unlikely to shift the Bank of England’s near-term stance, which remains focused on inflation dynamics, That said, persistent borrowing at these levels could increase the risk premium on UK assets over time, potentially complicating monetary policy down the line.”

Tony Redondo, Founder at Cosmos Currency Exchange, said the latest figures will weaken the Pound.

He added: “High spending outpaces revenue again, despite the highest tax take since the 1940s. UK debt at 95.5% of GDP raises sustainability concerns, risking higher gilt yields. 

"The Pound, already under pressure from a flatlining economy and the possibility of another two rate cuts before 2025, is out now faces the added burden of fiscal worries, structural issues like aging costs, and a debt servicing challenge to fiscal discipline. Markets and the Pound could weaken without tighter monetary policy, but tighter policy risks killing the economy stone dead.”

4 responses from the Newspage community

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Editor
Scott Gallacher
Director at Rowley Turton
No growth, high inflation and rising debt. Britain is a basket case. Investors should look abroad to protect their portfolios. We are in trouble.
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John Woolfitt
Director at Atlantic Capital Markets
The figures highlight the continued challenging balancing act for the Treasury. Despite efforts to consolidate the public finances, consistent pressures from debt interest payments, welfare spending and the costs of public services are keeping borrowing levels high. The data will fuel criticism of the government’s ability to bring the deficit under control. Markets anticipated a high borrowing figure, the worse-than-expected number could lead to upward pressure on UK gilt yields, particularly at the long end, as investors price in heavier issuance. However, unless sustained or significantly revised upward, the reaction is likely to be muted. The numbers alone are unlikely to shift the Bank of England’s near-term stance, which remains focused on inflation dynamics, That said, persistent borrowing at these levels could increase the risk premium on UK assets over time, potentially complicating monetary policy down the line.
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Editor
Tony Redondo
Founder at Cosmos Currency Exchange
High spending outpaces revenue again, despite the highest tax take since the 1940s. UK debt at 95.5% of GDP raises sustainability concerns, risking higher gilt yields. The Pound, already under pressure from a flatlining economy and the possibility of another two rate cuts before 2025, is out now faces the added burden of fiscal worries, structural issues like aging costs, and a debt servicing challenge to fiscal discipline. Markets and the Pound could weaken without tighter monetary policy, but tighter policy risks killing the economy stone dead.
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Aisha Hossain
Founder at Selhaya
Rising public borrowing adds to a general sense of uncertainty in the economy — and that uncertainty inevitably filters through to small brands like ours. While markets may focus on the pound, we notice more subtle shifts: slower purchasing decisions, reduced confidence, and harder planning cycles. For a luxury brand, where timing is everything, that atmosphere has a real effect.