The UK government borrowed £1.8bn in July, defying market expectations that public sector finances would break even for the month.
Markets had widely anticipated the Office for National Statistics to report no difference between government expenditure and receipts during the period.
The borrowing figure also came in above the Office for Budget Responsibility’s own forecast for July, adding pressure ahead of the first Budget of the Burnham government.
ONS chief economist Grant Fitzner said: “Public sector borrowing was lower in the financial year to date than in the same period last year, both in total and as a share of the economy. However, it is above the OBR spring forecast.”
Fitzner added: “Conversely, borrowing was slightly higher this month than in July last year, with spending growth outpacing higher receipts, including from self-assessed taxes which often feed in more strongly in July.”
Despite earlier suggestions that public sector debt had crossed a significant threshold, the ONS confirmed it remained below £3 trillion for the period.
Debt interest payments in July alone reached £7.7bn, further weighing on the overall public finances picture heading into autumn.
The July data represents one of the last full monthly snapshots Chancellor Healey will receive before delivering his first Budget on 28 October.
Healey will only have sight of August and September figures before setting out the Andy Burnham government’s fiscal agenda for the coming year.
On Thursday, Panmure Liberum economist Simon French said Healey was “not required” to raise taxes at the Budget to address the state of public finances in the short term.
French suggested the fiscal buffer available to Healey stood closer to £15bn rather than £22.7bn, though he indicated tax rises remained likely to fund spending commitments on defence and the cost of living.
The government has already moved to shut down reports around property tax reforms as ministers look to avoid another autumn dominated by fiscal speculation.
Ministers are currently on a parliamentary break before returning to a pre-Budget run-in period expected to last around two months.
The fiscal plans of both Burnham and Healey could face further complications from President Trump’s conflict with Iran, as trade disruption across the Strait of Hormuz has continued throughout ongoing peace negotiations.
Earlier this year, the Office for Budget Responsibility acknowledged it had previously underestimated government borrowing levels following Russia’s full-scale invasion of Ukraine, raising questions about the accuracy of current projections amid fresh energy market turbulence.