Government Borrowing Falls Below Previous Year as Public Finances Show Improvement

Families across Kent wondering about the state of public finances have received some encouraging news today. Government borrowing has dropped below last year’s levels for the first time in recent memory, with official figures showing a modest but meaningful improvement in the nation’s financial position.

The Office for Budget Responsibility announced that borrowing in the first nine months of 2025-26 reached £140.4 billion – that’s £0.3 billion less than the same nine-month period in 2024-25. As the reduction might seem small in percentage terms, it represents a turning point after years of elevated borrowing levels.

The Numbers Behind the Improvement

The figures reveal something quite remarkable happening beneath the surface. Year-to-date borrowing sits £4.1 billion below what the OBR forecast back in November 2025, suggesting the government’s financial position is strengthening faster than expected.

Central government departments have spent £2.8 billion less than projected, while local authorities – including Kent County Council and our district councils – have borrowed £1.3 billion less than anticipated. These aren’t accidental savings but reflect more disciplined spending across the public sector.

Looking at a longer timeframe, the Institute for Fiscal Studies found that borrowing over the first 10 months of this financial year came in £15 billion below the same period last year. That’s a sizeable shift in the right direction.

What’s Driving the Change

The improvement stems from two main factors. Government departments are keeping tighter control over spending, as tax receipts are performing better than expected thanks to stronger equity markets and improved business profitability.

Public sector net borrowing is projected to fall from 5.2 per cent of GDP last year to 4.3 per cent this year – equivalent to dropping from £153 billion to £133 billion. By 2030-31, borrowing could fall as low as 1.6 per cent of GDP, or £59 billion.

But there’s a catch. Around four-fifths of the projected improvement over the next five years relies on higher tax receipts rather than spending cuts. Higher-than-forecast growth in share prices has boosted capital gains tax, corporation tax, and dividend receipts – potentially reducing borrowing by up to £13 billion by 2030-31.

The Spending Commitments

The government hasn’t simply slashed spending to achieve these improvements. New policy measures since November’s Budget will actually increase borrowing by £4.3 billion per year on average, including key £4 billion annual increases for special educational needs and disabilities services from 2027 onwards.

This matters enormously here in Kent, where SEND provision has faced significant pressures. The additional funding should help improve services for children with special educational needs across our county’s schools.

Key Takeaways

• Government borrowing in first nine months of 2025-26 fell £0.3 billion below the same period last year to £140.4 billion
• Borrowing came in £4.1 billion below official forecasts, with both central and local government spending less than expected
• Public sector borrowing is projected to fall from 5.2% of GDP last year to 4.3% this year, continuing to decline through 2030-31

What This Means for Kent Residents

For Kent families and businesses, these figures suggest greater stability in public finances, which should translate into more predictable funding for local services over the coming years. The improved borrowing position means less pressure on councils to make emergency cuts, while the confirmed £4 billion increase in SEND funding will directly benefit Kent children with special educational needs. However, much of the improvement relies on continued strong performance in financial markets and tax receipts, so residents shouldn’t expect sharp rises in public spending – the focus remains on maintaining services while gradually reducing the government’s borrowing burden.