"The public sector finances are yet more proof the UK economy is on life support"

FINANCIAL experts pointed the finger firmly at the Government, with one saying “the UK economy is on life support” and another that, for Chancellor Reeves, “all the options are grim”, following the latest public sector finances data.

Borrowing - the difference between total public sector spending and income - was £20.7 billion in June 2025, £6.6 billion more than in June 2024 and the second-highest June borrowing since monthly records began in 1993, after June 2020, according to official data published this morning.

The interest payable on central government debt was £16.4 billion in June 2025, largely because the interest payable on index-linked gilts rises and falls with the Retail Prices Index; this was £8.4 billion more than in June 2024 and the second-highest June central government interest payable since monthly records began in 1997, after that of June 2022.

Richard Heys, Acting Chief Economist at the ONS, said: “The rising costs of providing public services and a large rise this month in the interest payable on index-linked gilts pushed up overall spending more than the increases in income from taxes and National Insurance contributions, causing borrowing to rise in June.”

Samuel Mather-Holgate, Independent Financial Adviser at Mather and Murray Financial, said: “The public sector finances are yet more proof the UK economy is on life support. Chancellor Reeves needs to administer some medicine - and fast - by releasing some of the pressure on the business sector so that it can breathe again. Sky high national insurance bills have strangled the prospect of growth, and now there is talk of increasing employer pension contributions. Reeves has got until the autumn to come up with a plan that will stimulate growth in the country.”

Colin Low, Managing Director at Kingsfleet, said the country is losing credibility and that bond markets could react: “There may come a time when the numbers are so huge that somebody just says, “enough is enough” and concludes that this debt just can’t be repaid, or even serviced. Credibility matters, and we must now surely be teetering on the brink. The bond markets could pile pressure on the Chancellor after this data.”

Daniel Wiltshire, Actuary and IFA at Wiltshire Wealth, said "the markets appear to be losing faith in the government. As the Budget approaches, expect plenty of debate and hand-wringing over Rachel Reeves' fiscal rules. But markets are politically agnostic — they will judge for themselves whether the plans to balance the books are credible."

Meanwhile, Scott Gallacher, Director at Rowley Turton, said: "Today’s borrowing figures are grim and spell trouble for everyone. The Government added £20.7bn in debt last month alone, piling pressure to keep taxes high and spending tight to calm bond markets. But without growth, things are only likely to get worse.

"For savers, high debt and sticky inflation make rate cuts less likely, so while savings rates may hold, inflation keeps eroding real returns. For investors, soaring debt repayments could crowd out public investment, weighing on long-term UK growth. Gilts may appeal short term, but confidence is fragile.

“The UK’s credit card is nearing its limit, yet we keep spending. Eventually, we all have to pay. The problem for Reeves is: what can she actually do to fix this? All the options are grim.”

Philly Ponniah, Chartered Wealth Manager at Philly Financial, said taxpayers are likely to be in the firing line: “For taxpayers, the implications are clear: a higher future tax burden looks more likely as the government works to close the growing deficit.”

Ranald Mitchell, Director at Charwin Mortgages, said Britain deserves better: “This is the cost of a government that’s ducking responsibility. With borrowing at £20.7 billion and debt interest hitting £16.4 billion in just one month, the consequences of economic denial are now plain to see. Ministers let inflation run riot, loaded up on index-linked debt, and buried their heads in the sand. Now the taxpayer is picking up the tab for their complacency. This isn’t just bad luck. It’s the result of failing to govern with discipline or foresight. Britain deserves better.”