UK borrowing costs jump to 'second highest on record' as Rachel Reeves faces 'challenging environment'

Public sector borrowing came in at £14.3billion in February 2026, up £2.2billion from the same time the year before, according to the latest figures from the Office for National Statistics (ONS).

This is also the second-highest February borrowing figure on record, just below the 2021 pandemic-era figure, in a blow to Chancellor Rachel Reeves's plans for the economy.

Notably, central Government debt interest costs primarily fueled February 2026's figures, alongside the increased costs of providing public services and benefit spending.

This meant that the public sector spent £10.8billion more than a year ago over the period.

Professor Joe Nellis, an economic adviser at MHA, said: "Public sector net borrowing reached £14.3 billion in February, marking a sharp turnaround from the exceptional £30billion surplus recorded in January.

"February’s return to borrowing underlines the more challenging reality facing the UK’s public finances. The January surplus was largely seasonal and driven by the annual spike in tax revenues.

"When those temporary factors fade, the structural pressures on Government finances quickly re-emerge. Borrowing is expected to be substantial across 2026. Weak economic growth has limited the expansion of the tax base, while spending pressures remain significant across areas such as healthcare, social support and debt interest payments."

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