UK runs much bigger than expected budget deficit in May

LONDON - Britain's government ran a budget deficit of £23.3 billion pounds ($30.7 billion) in May, the Office for National Statistics said on Friday, up 30% on a year earlier and above all economists' expectations in a Reuters poll.

Economists polled by Reuters had a median forecast of £18.5 billion for the month.

In March, before the impact of the U.S.-Iran war was clear, the government's budget watchdog forecast Britain would run a £115.5 billion deficit in the 2026/27 financial year, equivalent to 3.6% of national income and down from 4.3% in 2025/26.

Since then, the outlook for growth has weakened and borrowing costs have risen.

Last week Britain offered investors the highest yield since at least 1998 when it sold £9 billion of 15-year debt.

The government is also struggling to finance extra defence spending within existing budget rules and previous promises to other departments, prompting defence minister John Healey to resign in protest last week.

($1 = 0.7582 pounds)

(Reporting by David Milliken; editing by Sarah Young)

Copyright Reuters or USA Today Network via Reuters Connect.

This story was originally published June 19, 2026 at 2:17 AM.