New official data has revealed that UK government borrowing climbed to its third-highest level for October since records began, while consumers unexpectedly cut back on spending.
Public Finances Under Pressure
The Office for National Statistics reported that public sector net borrowing reached £17.43 billion in October 2025. This figure significantly exceeded economists' expectations, who had predicted borrowing of around £15 billion according to a Reuters poll.
While borrowing remained lower than the same period last year, the higher-than-anticipated figure comes at a crucial moment for the Treasury. This represents the final assessment of public finances before Chancellor Rachel Reeves delivers her budget announcement next week.
Consumer Spending Takes a Hit
In a parallel concerning development, retail sales data showed a 1.1% contraction during the half-term month of October. This decline caught analysts by surprise, as most had expected spending to remain flat rather than shrink.
The retail sales figures are particularly significant because they measure household consumption, which represents the largest expenditure component in the UK economy. Retailers reported to the ONS that consumers appeared to be holding back spending in anticipation of Black Friday deals.
Budget Implications and Economic Outlook
The ONS data revealed a mixed picture of the public finances. Increased spending on benefits and public services contributed to the higher borrowing requirement, though this was partially offset by stronger tax revenues.
These developments will likely influence the Chancellor's budget decisions as the government balances economic stimulus against fiscal responsibility. The combination of elevated borrowing and cautious consumer behaviour suggests ongoing economic challenges that policymakers must address.
With the budget announcement scheduled for next week, all eyes will be on how the government plans to navigate these complex economic conditions while supporting growth and managing public debt.
