Closing post
Time to wrap up….
UK government borrowing rose to a five-year high in August, official figures show, fuelling growing expectations for Rachel Reeves to raise taxes at the autumn budget and knocking the pound.
Figures from the Office for National Statistics (ONS) showed public sector net borrowing – the difference between public spending and income – rose to £18bn in August, £3.5bn more than in the same month a year earlier.
Dealing a blow for the chancellor as she prepares for the 26 November budget, the reading was above City predictions for a deficit of £12.75bn and forecasts from the Office for Budget Responsibility (OBR) of £12.5bn.
On top of upward revisions to previous months, total borrowing for the financial year to date jumped to £83.8bn, also the highest level since the height of the Covid pandemic in 2020. The total was £16bn higher than in 2024 and above a £72.4bn forecast from the OBR.
Sterling has slid through the day, and is now down over three-quarters of a cent against the US dollar at $1.3475.
Economists have predicted that fresh tax rises will be announced in the autumn budget.
In other news:
Donald Trump and Xi Jinping have held a phone call, which the US president says was very productive.
The number of personal insolvencies in England and Wales has jumped
US technology giant Nvidia has pledged to invest £2bn investment in UK tech companies.
Trump: Xi call was 'very productive'
Donald Trump has declared that his call with Xi Jinping was “very productive”, and revealed that the two leaders have agreed to visit each other’s countries.
Posting on Truth Social, Trump says:
I just completed a very productive call with President Xi of China. We made progress on many very important issues including Trade, Fentanyl, the need to bring the War between Russia and Ukraine to an end, and the approval of the TikTok Deal. I also agreed with President Xi that we would meet at the APEC Summit in South Korea, that I would go to China in the early part of next year, and that President Xi would, likewise, come to the United States at an appropriate time. The call was a very good one, we will be speaking again by phone, appreciate the TikTok approval, and both look forward to meeting at APEC!
We’ve not yet, though, heard confirmation from Beijing that the TikTok deal has been finalised…
After a day dominated by worries over the UK’s public finances, stocks have closed a little lower in London.
The FTSE 100 index of blue-chip shares has ended the day 11 points lower at 9216 points, which means its lost about 0.7% during this week.
Miners Fresnillo (+5.1%) and Endeavour (+5%) led the risers, while the London Stock Exchange Group (-5.7%) and WPP (-5.1%) were the top fallers.
The FTSE 250 index lost 0.6% today, with computing company Raspberry Pi (-5.8%) bottom of the pile.
Chinese President Xi Jinping said the US should avoid restrictive trade measures during his call today with US President Donald Trump, according to Xinhua News Agency.
That’s a sign that Beijing is looking to ease tensions between the world’s biggest economies.
However, there’s no immediate sign that the long-awaited TikTok deal has been agreed….
Bloomberg has more details:
Xi also told Trump that the Chinese government respects the wishes of businesses as they look to finalize an agreement on the sale of the US operations of ByteDance Ltd.’s social video app TikTok and would like to see those companies find a resolution to the issue, according to the readout from Xinhua.
The official Chinese news agency characterized the talks as positive and pragmatic and said Xi had expressed confidence that Washington and Beijing could handle issues that arise between the countries, while also suggesting that the US offer a fair environment for Chinese companies to do business.
Wall Street’s main indexes have nudged a little higher in early trading.
The Nasdaq has touched a fresh intraday record, as the tech stock rally continues.
And parcel delivery firm FedEx has jumped by 2.5%, after reporting stronger than forecast quarterly profits and revenues yesterday.
The week is ending on a low note for advertising giant WPP.
WPP’s shares are down around 4% in afternoon trading, and have hit their lowest level since 2009.
WPP’s shares have dropped this week during a gloomy few days for the ad industry. Rival S4 Capital (run by WPP’s former supremo, Sir Martin Sorrell) reported falling sales and widening losses on Monday, warning that nervous customers were spending less on marketing.
M&C Saatchi gave a similar warning yesterday, saying it expects revenues to fall this year and citing client caution and delayed project spending relating to macroeconomic woes.
SEC chair backs Trump's call to end quarterly reporting (despite concerns)
America’s financial watchdog has heeded Donald Trump’s call to relieve US companies from the burden of updating investors every quarter.
Paul Atkins, chairman of the U.S. Securities and Exchange Commission, said today his agency will propose a rule change following President Donald Trump’s call to switch quarterly earnings reports to a semiannual schedule.
Atkins told CNBC’s “Squawk Box” show today:
“I welcome that posting by the president, and I have talked to him about it. In principle, I think to propose change in what our rules are now, I think would be a good way forward, and then we’ll consider that and move forward after that.”
Atkins said if the rule change is approved, it will be left to companies to decide whether they switch to semiannual or stay with quarterly.
He added:
“For the sake of shareholders and public companies, the market can decide what the proper cadence is.”
SEC Chairman Paul Atkins told CNBC that he's on board with President Donald Trump's push for companies to end earnings reports on a quarterly basis.
— CNBC (@CNBC) September 19, 2025
Here's what he said. ⬇️ https://t.co/wqb0cQhaSd
Earlier this week, Trump urged the Securities and Exchange Commission to shift away from requiring firms to report on a quarterly basis and instead adopt a semi-annual schedule.
The president argued that less frequent reporting would “save money, and allow managers to focus on properly running their companies”.
It might, indeed.
But it could also make it harder to spot when companies are being run badly, and make investors less informed about how firms are performing.
As Brooke Masters wrote in the FT this week:
Quarterly reporting itself has been a bedrock of US markets since 1970. Well-run companies use the requirement to update investors on their progress.
More troubled groups are forced to disclose potential legal and regulatory problems, which is more important in the US than in places like the UK and Germany where companies have a duty to inform the market quickly of material changes. That is one reason investor groups opposed Trump’s first tilt at quarterly reporting and are now raising concerns again.
Back in the City, shares in private healthcare group Spire Healthcare have jumped over 15% today.
Spire is leading the risers on the FTSE 250 index after it told investors it was in talks over “a range of potential options”, including a potential sale deal.
Spire is among the UK’s largest private healthcare businesses, running 38 hospitals and more than 50 clinics across England, Wales and Scotland.
The company said it is working with advisers from Rothschild & Co to review its options and has now held “discussions with a number of parties”.
“This process is highly preliminary and no decision has been made regarding whether any such option will be pursued at this stage,” the company said.
It added that it has not yet received any approaches regarding a takeover deal.
Sir Ian Cheshire, chairman of Spire, said:
“In July we made clear that the Board believed that Spire was undervalued by the market given its strategic progress and property underpin, and that we would continue to actively evaluate and implement any appropriate action that drives long term shareholder value.
“To that end, the board decided to appoint Rothschild to assess a range of options, which may include a potential sale of the company.
“At the same time, we remain focused on delivering both our strategy and outstanding personalised care for our patients.”
The move follows pressure from major investors for Spire to look at a sale in order to secure returns for its shareholders.
Trump and Xi 'hold phone call'
US president Donald Trump is holding a call with Chinese leader Xi Jinping today.
According to the Xinhua news agency, “Chinese President Xi Jinping on Friday held phone talks with U.S. President Donald Trump”.
It will be the first time the pair have spoken since June.
Trump said to reporters yesterday that they’ll focus on TikTok and trade on their call, saying:
“We’re very close on all of it.”
Earlier this week, Washington and Beijing struck a framework agreement on transferring TikTok to US-controlled ownership.
However, there have been suggestions from China that Beijing would retain control of the algorithm that powers the site’s video feed.
Our US Politics Live blog is will be tracking events:
Weaker-than-expected tax receipts this financial year are pushing UK borrowing higher than expected.
The Office for Budget Responsibility has explained today that central government accrued receipts in the first five months of 2025-26 were £6.1bn below forecast, while spending is pretty much in line with expectations.
Monthly HMRC cash receipts were £4.1bn less than expected in August.
According to the OBR:
Cash VAT receipts were £12.8bn in August, £3.2bn below forecast
PAYE income tax and NICs cash receipts were £36.8bn in August, is very close to forecast
Self-assessed (SA) income tax and capital gains tax cash receipts were £1.5bn in August, which is £500m below forecast.
Goldman Sachs has dropped its forecast that the Bank of England will cut interest rates in November.
It now expects the next cut in February, followed by quarterly cuts that will bring Bank rate down to 3% by the end of 2026.
Goldman economists James Moberly and Sven Jari Stehn say they no longer expect a cut in November, given elevated inflation (which stuck at 3.8% last month) and the Bank’s “hawkish commentary” yesterday, when it left rates at 4%.
They insist, though, that there are “compelling reasons” for Bank Rate to ultimately fall more than priced, adding:
First, we look for weaker growth, labour market and inflation data than the MPC over the next quarters. Second, we expect a significantly contractionary Budget on November 26. Third, our analysis points to a neutral policy rate of around 3%.
Budget tax rises predicted
Economists are predicting tax rises in the autumn budget, following the rise in borrowing in August.
Elliott Jordan-Doak, senior UK economist at Pantheon Macroeconomics, has warned that the task facing Rachel Reeves is now far worse:
He said:
“Today’s figures suggest the Chancellor will need to raise taxes by more than the £20 billion we had previously estimated.
“We still expect the Chancellor to fill the fiscal hole with a smorgasbord of stealth and sin tax increases, along with some smaller spending cuts.”
Shaun Moore, tax and financial planning expert at Quilter, says Reeves is “hemmed into a corner”, after Labour ruled out increasing income tax, NICs or VAT for working people.
Moore adds:
With a £22bn fiscal hole to fill and the most obvious levers off the table, attention inevitably shifts to other taxes. Inheritance tax is already on the rise, with receipts totalling £3.7 billion so far this year – £0.2 billion higher than the same period in 2024.
Frozen thresholds, high property values, and the scheduled inclusion of pensions in 2027 mean IHT is set to grow further, making it a tempting, if controversial, source of additional revenue.
UK banks are among the fallers on the London stock market this morning – perhaps a sign that investors suspect they could face new taxes in the budget.
NatWest (-2.5%), Lloyds Banking Group (-2%) and Barclays (-1%) are all down, after this morning’s public finances showed UK borrowing this fiscal year is running £11bn over forecasts.
There were calls this summer a windfall tax on large lenders in the autumn budget, to help fill the shortfall in the chancellor’s plans.
The IPPR thinktank argued that the banks should hand back some of the profits they are now making on their reserves at the Bank of England, accrued through its ‘quantitative easing’ stimulus programme which is now being slowly unwound.
Updated
Simon French, chief economist at UK investment bank Panmure Liberum, highlights how the UK’s borrowing situation has deteriorated since last summer’s election:
The deterioration in both the total UK borrowing requirement (£162bn; 12m rolling) and current budget deficit (£86bn) is pretty stark since last year's General Election. Borrowing to fund investment - as the fiscal rules changes of October 2024 provided air cover to do - is more… pic.twitter.com/YbRjTM53iy
— Simon French (@Frencheconomics) September 19, 2025
Insolvencies rise, amid record number of debt relief orders
The number of people entering insolvency in England and Wales has jumped, suggesting more households are struggling.
In August 2025, 11,348 individuals entered insolvency in England and Wales, new data from the Insolvency Service shows. This is 7% higher than in July 2025 and 16% higher than a year ago.
This included 622 bankruptcies, 4,239 debt relief orders (DROs) and 6,487 individual voluntary arrangements (IVAs).
That’s the highest number of monthly DROs since they were introduced in 2009.
Debt relief orders (DROs) were introduced in England in Wales in 2009 as a low-cost alternative to bankruptcy for people struggling with debts. They let people freeze their debts for a year then write it off completely if their finances haven’t changed.
The Office for Budget Responsibility, Britain’s fiscal watchdog, has confirmed that UK borrowing this financial year is £11.4bn above its forecasts.
In its latest commentary on the UK public sector finances, the OBR explains:
The overshoot in this month’s estimates compared to our March forecast profile is primarily due to revisions which have increased estimated borrowing by local authorities so far this year. In addition, VAT and other receipts were lower-thanexpected in the month of August.
Nvidia to invest £2bn in UK tech firms
US technology giant Nvidia has pledged to invest £2bn investment in UK tech companies.
Nvidia founder and chief executive Jensen Huang announced the investment last night at a packed event attended by hundreds of venture capitalists and entrepreneurs in London’s King’s Cross, our UK technology editor Rob Booth reports.
He was joined on stage by the prime minister Keir Starmer as he announced a list of UK companies in which Nvidia would invest. One by one, Huang called out the names of AI firms including the driverless car start-up Wayve, Basecamp Research, which is involved in life sciences, video platform Synthesia and finance app Revolut and yelled: “I’m going to invest in your next round”
Huang also gave Starmer a gift, a DGX1 which he described as the world’s first AI supercomputer. It was inscribed with the message: “Prime Minister Starmer, this is the age of AI. A new industrial revolution begins”.
Huang ended his presentation, which included appearances by the UK secretaries of state for business and science and technology, Peter Kyle and Liz Kendall, and the US commerce secretary Howard Luttnick, saying to the audience of tech firms: “I love you guys, I’m looking forward to making a fortune off of all of you”.
In a sign of rising pressure on Downing Street not to implement tough AI regulations that would affect US investors and tech firms, the US commerce secretary Howard Luttnick, said “we need standards not safety”.
Addressing the UK business secretary Peter Kyle, Luttnick said:
”In order to win the race to AGI we must arm our best entrepreneurs, our best innovators, our best engineers....It’s key that you deliver the regulatory infrastructure framework so that the smartest people here feel good about that investment.”
Nvidia’s investment pledge came just hours after it announced plans to invest $5bn in Intel.
It also comes alongside a multibillion-dollar transatlantic tech agreement announced as Donald Trump arrived in the UK – here’s our breakdown on what was announced, and what is new:
Updated
Retail sales rise in Great Britain as warm weather boosts clothing purchases
In better economic news, retail sales rose last month, thanks to back-to-school shopping and warm weather.
Total retail sales in Great Britain rose 0.5%, the Office for National Statistics (ONS) said, as parents prepared for the new school year and shoppers enjoyed a series of heatwave and the summer’s last bank holiday.
The figure was slightly higher than the 0.4% increase that some analysts had forecast.
The ONS, which revised its estimate for July’s monthly sales growth down from 0.6% to 0.5%, also said that non-store retailing, primarily online shopping, increased in August.
Clothing sales rose 1.3% month on month in August, boosted by the warm conditions, while there was a 1.1% monthly increase in non-food stores sales – the total of department stores, household and other non-food stores.
More here:
Saxo: "sterling gets the treatment as government borrowing gets out of control"
Today’s borrowing figures – showing a huge jump ahead of official forecasts – lays bare the challenge facing the UK, warns Neil Wilson, UK investor strategist at Saxo Markets.
He adds:
Sterling is rightly getting the treatment because the borrowing is a) too high, b) unsustainable, c) out of control and d) never going to change.
The pound is indeed continuing to slide – it’s now down two-thirds of a cent, at $1.3483, the lowest in almost two weeks.
August’s jump in borrowing means there are “difficult fiscal decisions” on the horizon for Rachel Reeves to tackle, says the EY ITEM Club.
Matt Swannell, chief economic advisor to the EY ITEM Club, explains:
“In August, the Government borrowed £18bn, the largest August deficit in five years and £5.5bn more than the OBR expected. As the Budget approaches, this leaves the UK finances in a fragile position. So far this fiscal year, the Government has borrowed £83.8bn, outstripping the OBR’s £72.4bn forecast.
“However, the Government’s performance against its primary fiscal rule will be judged by the progress made on the current budget, which accounts for how much it borrows to cover day-to-day spending. In August, the current budget deficit was £13.6bn, up from £9.6bn at the same time last year. Across the fiscal year-to-date, the current budget is in deficit by £62bn, well above the OBR’s March forecast of £46.6bn. The OBR expects a marked reduction in current borrowing in the latter half of this fiscal year, so it looks like it will only become more difficult to carefully manage the day-to-day finances from here.”
“The Government has pledged to only borrow to invest by FY2029-2030, and while the latest data shows it may be starting from a more difficult position than expected at the Spring Statement, greater fiscal challenges loom. A combination of gilt market stress and reversals on welfare reform has used up the thin margin for error in the Government’s current spending plans, meaning taxes will almost certainly need to rise if the fiscal rules are to be met. Even then, the task of getting the public finances back on track could be made much more difficult by a downgrade to the OBR’s very optimistic growth forecasts, leaving a £20bn hole in tax revenue.”
Pound falls and bond yields rise after UK borrowing soars
This morning’s UK public finances are going down badly in the City.
The pound has dropped by half a cent this morning, to $1.35. That puts sterling on track for its third daily fall in a row, as it drops back from Tuesday’s two-month high.
Government bonds are under pressure too, as traders react to the news that borrowing is £11bn higher than forecast so far this year.
The yield, or interest rate, on 10-year UK gilts (bonds) is up 4 basis points at 4.7% (up from 4.66% last night).
30-year gilt yields have also risen by 4bps, to 5.54%.
Kathleen Brooks, research director at XTB, says today’s public finance data puts the sustainability of borrowing and the size of UK state into question:
The pound has sunk on this data, and is testing support at $1.3500, it is the second worst performing currency in the G10 FX space today, and is lower by 0.33% vs. the USD. The UK’s bond market is extremely fragile, 10-year and 30-year yields rose sharply on Thursday, although global long end yields were higher, the UK was the weakest performer across Europe and the US.
UK bond yields could rise further on this news, especially as the Bank of England is maintaining its ‘careful and gradual’ approach to loosening monetary policy. Although the BOE has reduced the amount of bonds that it is offloading from its balance sheet, especially long end bonds, they are still shrinking their balance sheet albeit at a slower pace. Thus, the BOE cannot be relied on to relieve pressure on the long end of the Uk Gilt curve.
The UK public finances are continuing to deteriorate despite the economy not being terribly weak, says Paul Dales, chief UK economist at Capital Economics.
And that means the chancellor will have to raise around £28bn in the Budget on 26 November, mostly through higher taxes, Dales adds, as borrowing so far this year is running above forecast.
He explains:
Public net sector borrowing of £18.0bn in August (consensus £12.8bn, OBR £12.5bn) means that after five months of the financial year borrowing is already £11.4bn higher than the OBR forecast at the Spring Statement in March.
The overshoot in the Chancellor’s chosen fiscal mandate of the current budget is even greater at £15.4bn (the current budget deficit was £13.6bn in August versus the OBR forecast of £9.5bn). Of course, what matter’s is what the OBR forecasts the current budget to be in 2029/30, which is when the Chancellor’s fiscal mandate bites.
Our current estimate is that it will forecast a deficit of about £18bn, meaning the Chancellor will have to raise £28bn (see here), mostly through higher taxes (see here), if she wants to keep her buffer against her rule of £10bn.
Mel Stride, the shadow chancellor, has accused Rachel Reeves of losing control of the public finances, following the jump in borrowing in August:
“Keir Starmer and Rachel Reeves are too weak and distracted to take the action needed to reduce the deficit. The chancellor has lost control of the public finances, and Labour’s weakness means much needed welfare reforms have been abandoned.”
James Murray, chief secretary to the Treasury, has responded to today’s UK public finance:
“This Government has a plan to bring down borrowing because taxpayer money should be spent on the country’s priorities, not on debt interest.
Our focus is on economic stability, fiscal responsibility, ripping up needless red tape, tearing out waste from our public services, driving forward reforms, and putting more money in working people’s pockets.”
Updated
Interest bill on government debt rises again
Once again, Britain spend billions of pounds servicing its growing national debt (and thus adding to it!).
The interest bill on central government debt rose to £8.4bn in August, £1.9bn more than in August 2024, and £900m more than in July.
This increase was driven by higher inflation, which added to the cost of index-linked government bonds.
So far this financial year, the interest payable on central government debt has increased by £10.6bn to £49.9bn, largely because the interest payable on index-linked gilts rises and falls with the Retail Prices Index (RPI) of inflation.
Borrowing so far this year is £11.4bn over forecast
Worryingly for Rachel Reeves, government borrowing so far this financial year is running ahead of the Office for Budget Responsibility’s forecasts.
From April to August, borrowing now totals £83.8bn, £16.2bn more than in the same five-month period of 2024.
That’s the second-highest April to August borrowing since monthly records began in 1993, beaten only by 2020 when Covid-19 drove up spending and hammered tax receipts.
It’s also £11.4bn more than the £72.4bn forecast by the Office for Budget Responsibility (OBR) in March.
That indicates that the chancellor could need to take measures to address rising borrowing, to stick within her fiscal rules.
Updated
MHA: "UK public sector borrowing jumps again deepening the Chancellor’s worries"
This morning’s jump in UK public sector borrowing will “deepening the Chancellor’s worries, warns Professor Joe Nellis, economic adviser at MHA, the accountancy and advisory firm.
Professor Nellis explains:
UK net public sector borrowing rose significantly in August to £17.96bn, piling extra pressure on the Chancellor as preparations intensify for the Autumn Budget.
The overshoot was driven by persistently high debt interest costs on inflation-linked gilts — 30-year gilts reached their highest in almost 30 years in August. The debt-inflation costs are now projected at over £110 billion in 2025-26. Higher borrowing is also the result of rising welfare spending and higher public sector pay settlements.
As the economy continues to falter, without any consistent and sustained growth, increased government borrowing makes the Chancellor’s fiscal headroom even slimmer ahead of the Budget on 26th November. This simply cannot go on. A government cannot continue to spend beyond its means while espousing belief in ‘fiscal stability,’ without evoking the wrath of the financial markets. The Chancellor has some very difficult, but very important, decisions to make at the Budget if fiscal stability is to be secured.
UK borrowing jumps to £18bn in August
Newsflash: Britain’s government borrowing soared in August, as spending rose faster than tax receipts, adding to the challenges facing Rachel Reeves as she draws up the autumn budget.
Public sector net borrowing excluding public sector banks jumped to £18bn in August 2025. This was £3.5bn more than in August 2024 and the highest August borrowing for five years.
It’s also £5.5bn more than the £12.5bn which the Office for Budget Responsibility (OBR) had predicted the UK would borrow in August.
Public sector net borrowing excluding public sector banks was £18.0 billion in August 2025.
— Office for National Statistics (ONS) (@ONS) September 19, 2025
This was £3.5 billion more than in August 2024 and the highest August borrowing for five years.
Read more ➡ https://t.co/qWlrE0pUje pic.twitter.com/JRF2x03KmF
ONS chief economist Grant Fitzner said:
“Last month’s borrowing was the highest August total since the pandemic.
Although overall tax and National Insurance receipts were noticeably up on last year, these increases were outstripped by higher spending on public services, benefits and debt interest. Total borrowing for the financial year to date was also the highest since 2020.
Updated
Introduction: Consumer confidence has fallen back
Good morning, and welcome to our rolling coverage of business, the financial markets and the economy.
UK consumer confidence has weakened, new data today shows, as people grow gloomier about the their personal financial situation and the state of the economy.
With a likely tax-raising budget looming in two months time, GfK’s consumer confidence Index decreased by two points to -19 in September, reversing a rise recorded in August.
All five measures of consumer confidence fell, including how confident people felt about making a major purchase.
Neil Bellamy, consumer insights director at GfK, warned there is an “autumnal chill” in this month’s report, and explains:
The August 7th decrease in interest rates does not appear to have provided any obvious boost to the financial mood of consumers or drawn attention away from day-to-day cost issues. Both personal finance measures – past and future – are lower, while our major purchases measure has dropped three points to -16.
Even more striking is an eight-point fall in saving intentions. Looking at the economy, sentiment is sliding sharply: in June 2024 our forward-looking measure stood at -11, but just 15 months later it has slumped to -32.
Perceptions of the past year remain weak too, down three from last month to -45. With tax rises expected in the November budget, the risk is that confidence inevitably falls, just like the autumn leaves.”
Yesterday, retailer Next warned that the economic outlook was weakening, giving the company “another reason to be cautious”.
The agenda
7am BST: Retail sales across Great Britain for August
7am BST: UK public finances for August
Updated
