The UK government borrowed £18.3 billion in August, surpassing expectations and adding pressure on Chancellor John Healey as he prepares to present the upcoming budget. According to the Office for National Statistics (ONS), public sector net borrowing was £2.9 billion higher than in August 2023 and £3.5 billion more than predicted by the Office for Budget Responsibility (OBR). This pushed the year-to-date deficit to £77.3 billion, £8.1 billion above the OBR's forecast. The borrowing figure was the second-highest for August on record, following the level recorded in 2020. The increase in borrowing was driven by higher public sector spending, which outpaced tax receipts. This was partly due to inflation-related costs and increased spending on state pensions and benefits. Additionally, the government paid £8.8 billion in interest on its debts in August, the highest figure for the month since records began. This was partly due to higher inflation pushing up the interest payable on Retail Prices Index (RPI)-linked government bonds, known as gilts. The ONS noted that the rise in borrowing was influenced by higher inflation, which reached its highest rate in five months in August, driven by increased petrol and diesel prices. Although tax receipts were higher compared to the same period last year, the pace of price increases led to higher spending on public services and benefits. Emma Reynolds, the Chief Secretary to the Treasury, emphasized the importance of fiscal discipline, stating that the government is committed to maintaining its fiscal rules with a buffer against uncertainty. She highlighted the need to ensure that debt interest costs, which amount to billions of pounds, do not detract from funds that could be used to improve public services. Martin Beck, chief economist at WPI Strategy, noted that the figures represent an unwelcome setback for the government ahead of the budget. He warned that a quarter of government debt is linked to inflation, and the cost of paying interest on this debt is likely to rise over the coming months. However, he also cautioned against overinterpreting a single month's data due to the volatility in the numbers. Ruth Gregory, deputy chief UK economist at Capital Economics, described the figures as a "dismal backdrop" for the autumn budget, suggesting that many of Prime Minister Andy Burnham's policy ambitions may be "reined in or delayed" to avoid significant tax hikes or a negative market reaction. She also warned that with the economy weakening, the government is likely to continue borrowing more than expected. Andy Burnham, the Prime Minister, has indicated he is prepared to make "difficult decisions" to keep the economy on track, following a new acceleration in inflation to 3.1% in August, attributed to the rise in fuel prices linked to the war in the Middle East. The public deficit, measured as the difference between total public sector spending and revenue, amounted to £18.3 billion in August, an increase of 19% year-on-year. Public debt remains just below the £3,000 billion threshold, at 93.8% of GDP.