As the Office for National Statistics has reported this morning:
Borrowing - the difference between total public sector spending and income - was £20.7 billion in June 2025; this was £6.6 billion more than in June 2024 and the second-highest June borrowing since monthly records began in 1993, after that of June 2020.
You will, of course, be aware that calamitous warnings will be issued as a consequence of this in all the mainstream media today, and that the right-wing press will be announcing that the country is going to hell in a handcart.
None of this will, of course, be true. The reality is that what should have been said is in the following press release, which was not issued by HM Treasury this morning:
The government is delighted to announce the continued success of the saving schemes that it provides for the benefit of people in the UK and for those who wish to save funds in this country from overseas.
In June 2025, the total new funds saved with the government amounted to £20.7 billion, which was one of the highest figures June since records began.
The figure included £8.4 billion of funds credited to the accounts of those saving with the government using index linked bonds, which provide a long-term protection against the risk of inflation, which is particularly important to UK pensioners who rely on their mechanism to ensure that they receive a secure income in retirement, which is one of the government objectives. These balances will not actually be paid out in case for approximatelyt 18 years, on average.
It remains the government's policy to continue to provide attractive savings opportunities for those who wish to save in a secure environment, knowing that whatever happens the government will always be able to repay them in full. This guarantee provides financial markets with the essential stability that they need, especially at this time of international stress with reagrd to trade, the future economic outlook and interest rate stability.
The government has confirmed that it is committed to providing a full range of financial products to assist those who need to manage these issues into the future. As a result it will meet the demands of those who wish to save with it, whether they be individuals, banks, pension funds, life assurance companies, foreign governments and those from overseas who wish to save in sterling, as many do. All will have the have opportunities that they require to deposit funds in this safe and secure manner, confident that their money is being well managed.
I can dream, can't I?
Except, it's not much of a dream, because this is the reality of what is actually happening that underpins today's so-called borrowing figures. But, as ever, it appears impossible for this government to tell the economic truth.
Taking further action
If you want to write a letter to your MP on the issues raised in this blog post, there is a ChatGPT prompt to assist you in doing so, with full instructions, here.
One word of warning, though: please ensure you have the correct MP. ChatGPT can get it wrong.
Thanks for reading this post.
You can share this post on social media of your choice by clicking these icons:
There are links to this blog's glossary in the above post that explain technical terms used in it. Follow them for more explanations.
You can subscribe to this blog's daily email here.
And if you would like to support this blog you can, here:
Buy me a coffee!
The more we need to borrow, the higher cost of borrowing and the more interest we pay.
More interest means less money available for schools, hospitals etc
That’s why it’s an issue.
It’s only you that seems not to understand this.
“The more we need to borrow…”
We don’t need to borrow. The UK is a sovereign country, monetarily (unlike, for example, France or Germany). It issues its own currency and therefore doesn’t need to borrow anything to finance its activities (unlike, for example, France or Germany). Whenever Parliament approves, the government simply spends money into existence.
“The more we need to borrow, the higher cost of borrowing and the more interest we pay”
The cost of borrowing is entirely within the government’s control. As Richard points out, the government issues bonds because it wants to offer a reliable, risk-free savings vehicle to the public. It could do so at any interest rate, regardless of the amount involved. The City could then take it or leave it. (Unfortunately, this doesn’t happen at the moment; Whitehall and Westminster have surrendered control of rates to the gamblers in the City).
“More interest means less money available for schools, hospitals etc”
The availability of money is never an issue. Unlike households and businesses, the central government isn’t subject to a financial constraint. However, if its demands exceed the real resources available (people, equipment, know-how etc.), its spending will trigger inflation, so it is always subject to a real resources constraint.
Thanks
And the formatting does work – it just does not show that to you. Sorry!
From Wiki “Economical with the truth” became a political catchphrase in the United Kingdom in 1986 during the Spycatcher trial in the Australian Supreme Court of New South Wales. Robert Armstrong, the UK Cabinet Secretary, was questioned by then-barrister Malcolm Turnbull about a letter to the publisher asking for advance copies of a book, falsely implying that the government did not already have copies.
Q: So that letter contains a lie, does it not?
A: It contains a misleading impression in that respect.
Q: Which you knew to be misleading at the time you made it?
A: Of course.
Q: So it contains a lie?
A: It is a misleading impression, it does not contain a lie, I don’t think.
Q: What is the difference between a misleading impression and a lie?
A: You are as good at English as I am.
Q: I am just trying to understand.
A: A lie is a straight untruth.
Q: What is a misleading impression – a sort of bent untruth?
A: As one person said, it is perhaps being economical with the truth.
Bob Ellis wrote that the audience had laughed at “bent untruth”, and that Armstrong expected a laugh for “economical with the truth” but got none.
Political opponents of the government’s actions in the Spycatcher case derided Armstrong’s distinction’
Thanks
……………..and even more impossible for our weak media to take them to task for it just by doing some research. All the media does is reinforce the sodding lies.
Why is the difference between “public spending and income” referred to as borrowing?
To whom is this borrowing/“borrowing” owed?
Under which terms and conditions?
https://youtu.be/Eh3iAzbLUqI?si=_cOXqBlSpAIDAiao
The irony about all this is that if the government wanted to attract investment and money from over seas then now is the best time. The immanent collapse of the USA into anarchy will see a huge amount of capital flight to safer areas.
So how does the government attract this? Well function like a real government and have an industrial strategy founded upon building things of greater value (not necessarily monetary) to the country than the sum of it’s parts. This country needs decades of infrastructure development to bring it to the 2050s and be ready for climate change, to make it cheaper to live in and better. This strategy needs to be kept away from meddling by parties and ministers in power, where change can only happen with a free vote and potentially a super majority. Then business can feel safe about investing and we can get projects on time.
This is a really good framing device for explaining an economic issue. Take what the mainstream media says and rewrite it from an alternative (correct) point of view. It helps those of us who need a bit of narrative to understand things. Thanks.
I might use it more.
I thought I would post this song just to deal with the frustration of all these lies we live under.
https://www.youtube.com/watch?v=RgPeP_pfjp4
Porno for Pyros: Pets (1993).
Great lyrics………..
New to me…
Inspired by your framing, here is my email to my MP:
Dear x,
So today the news is that the Government borrowed more than expected last month. However, this is not a negative! It means that there are plenty of people who believe enough in the UK that they are prepared to spend their hard earned money in buying Gilts, building up their saving account.
Can you please make this point to the Treasury as they appear to be quite upset at offering so many Gilts for sale. Of course, since the Bank of England has to create any Sterling needed to pay the bills authorised by Parliament, there is never actually a need for the Government to issue Gilts to “raise money”, they can instead run an overdraft with the BoE (I think it used to be called the ways and means account?), and any interest incurred on the overdraft paid to the BoE is effectively the country’s money anyway, since the BoE is 100% owned by the Government. It would be like your right hand borrowing £10 from your left and agreeing to pay interest on it, which just goes straight back into your pocket.
Thanks
Richard – belated thanks for the info
Hans Christian Anderson knew about human nature and the reasons people try to curry favour by lying about what should be obvious, but isn’t because of the lies.
We should really know that sovereign governments who issue their own currency and licence banks do not really need to borrow. It is a fact. Indisputable….and yet…the naked King (fact) parades about supposedly draped in the finest tailoring(lies). There’s no excuse for it and it’s insulting to our intelligence.
We can all dream Richard but I will not bother writing to my MP as regardless of what ChatGP may say I already know that I have the wrong one. Sadly there will be little chance of changing this for another 4 years.
I can see how your analysis differs completely from that commonly presented in the news media.
Take for example Andrew Neil:
https://archive.ph/QzmGL
My question is: What hangs on the difference between your analysis and that of Andrew Neil?
Is it just a matter of language or academic characterization, or are there real world implications?
So for example, Neil fears that because of the high borrowing, we’re necessarily heading for higher taxes and low growth, with a risk of soaring interest rates and financial crisis.
Regardless of whether one accepts Neil’s conclusions or not, one can see that in his framing, the size of the borrowing places constraints on the Chancellor’s actions or Bad Things may result.
If instead, we see the “high borrowing” as the Government offering large savings opportunities, are there any implications? Do they place constraints on the Chancellor? Can the savings opportunities be too high? Does she need to do anything to mitigate the chance of Bad Things? Or is none of this an issue purely by virtue of the facts that tax does not fund government spending, the government does not need to borrow, and the government can create money?
I hope you can see what I’m trying to ask: What hangs on the difference between your conceptualisation and that commonly represented by commentators such as Andrew Neil?
I have explained this many many times on this blog and cannot rewrite it again for a pseudonymous first time commentator.
Apologies. I’ve only just discovered the blog.
I’ll go through the archives for the explanation.
Thanks
Just Google it or ask ChatGPT for my view on it
But savings are dead money – so not good? What am I missing?