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UK government borrowing rose more than expected in May, as debt interest costs hit a record for the month, while separate figures showed retail sales rebounded on warm weather and promotional activity. According to the Office for National Statistics on Friday, public sector net borrowing, excluding public sector banks, totalled £23.3 billion in May, up 30% from £17.9 billion a year earlier. The figure exceeded the £17.7 billion forecast by the Office for Budget Responsibility by £5.6 billion. Borrowing in the first two months of the 2026-27 financial year totalled £46.3 billion, up £8.9 billion from the same period a year ago and £7.7 billion above the OBR forecast of £38.6 billion. The ONS said central government debt interest payable rose to £11.7 billion in May, up £4.1 billion, or 54%, from a year earlier and the highest May figure on record. Public sector net debt stood at 95.1% of gross domestic product at the end of May, up 0.4 percentage points from a year earlier and remaining around levels last seen in the early 1960s. The current budget deficit, which measures borrowing to fund day-to-day public sector activities, was £18.5 billion in May. In the financial year to date, the deficit totalled £34.5 billion, £7.0 billion higher than a year ago and £6.0 billion above the OBR’s forecast. Separately, the ONS reported that UK retail sales volumes rose 1.2% in May from April, beating expectations after a revised 1.0% decline the previous month. Sales volumes increased 0.4% in the three months to May compared with the three months to February. The ONS said department stores benefited from good weather during the month, while promotions boosted sales at non-store retailers. ‘Retailers suggested that promotions and the hot weather in May increased sales volumes for non-store retailers and department stores,’ the statistics office said. Computer and telecommunications retailers also continued to benefit from product launches earlier in the year. Copyright 2026 Alliance News Ltd. All Rights Reserved.
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