Economic Buzz: UK borrowing falls to three-year low but risks remain from global tensions

UK government borrowing dropped to its lowest level in three years, though pressures from the Iran war could weigh on the outlook.

The fiscal deficit stood at ?132 billion in the year through March, down by ?19.8 billion from 2024?25 and broadly in line with the ?132.7 billion forecast by the Office for Budget Responsibility. For March alone, borrowing was ?12.6 billion, according to the Office for National Statistics.

Following the data, the Debt Management Office lowered its gilt issuance plans. The government now expects to sell ?246.2 billion in bonds in the 2025?26 fiscal year, nearly ?6 billion less than its previous estimate. This revision came after a cash-based borrowing measure was ?8.8 billion below earlier forecasts.

The deficit accounted for 4.3% of GDP in 2025?26, marking the lowest level since before the COVID-19 pandemic. Earlier projections from the Office for Budget Responsibility suggested the deficit could fall below 2% by the end of the decade, although these estimates were made shortly after the outbreak of the Middle East conflict, which continues to pose economic risks.

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