The UK government recorded a £1.8 billion deficit in July 2026, a sharp reversal from the balanced budget expected by economists and the £500 million surplus projected by the Office for Budget Responsibility. Record self-assessment income tax receipts of £17.1 billion, up £1.7 billion year-on-year, were more than offset by a £2 billion increase in social benefits spending and £1.2 billion rise in goods and services expenditure. Borrowing for the first four months of the 2026/27 fiscal year reached £56.7 billion, £2.3 billion above OBR projections. Public sector net debt stood at £2,984.9 billion, or 94.1% of GDP, at the end of July. As Chancellor John Healey prepares his first Budget for October 28, he must reconcile commitments on cost-of-living support, youth employment programs and defense spending amid borrowing above forecasts.