Fuel and travel costs are pushing prices up again
Thursday 5 November 2026
Inflation has risen to 3.1%, meaning everyday spending is getting more expensive just as household budgets are already under pressure.
Budget deficit
The gap when the government and wider public sector spend more than they receive over a period.
Key term
What it means
A budget deficit is the shortfall in a period, often a year, between money coming in from taxes and other sources and money spent by the public sector. In UK headlines the broad measure is usually called public sector net borrowing. The deficit is a flow over time; public debt is the amount owed at a point in time. Borrowing to cover a deficit generally adds to debt, but the change in measured debt can also be affected by other transactions.
Example
In a made-up year, the public sector receives £100 billion and spends £120 billion. The deficit is £20 billion for that year. This is not the total stock of debt built up over many years.
Why it matters
A government can reduce its deficit while it still borrows money. Calling a smaller deficit “paying off the debt” would be misleading.
Also known as
fiscal deficit
Related terms
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Automatic stabilisers
Parts of the tax and benefit system that respond to a weaker or stronger economy without a new policy decision.
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Debt interest
Interest the public sector pays on money it has borrowed.
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Debt to GDP ratio
Public debt compared with the value of goods and services produced in a country over a year.
Read more -
Fiscal policy
Government decisions about taxes, spending and borrowing.
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Fiscal rules
Targets or limits a government sets for borrowing, debt or other measures of the public finances.
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Primary deficit
The gap when public spending, excluding debt interest, is greater than public income.
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Public sector net debt
A UK measure of the public sector's outstanding debts after subtracting certain assets it can quickly turn into cash.
Read more -
Public spending per person
Public spending divided by the number of people it covers.
Read more
Keep in the loop
News
Highlights from about the UK economy, the UK government and the UK public sector.
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Guides and insights
Analysis
Clear, accessible analysis of the economic issues shaping everyday life
Living standards
What does a day’s work buy?
Comparing the cost of everyday life across generations, from bread and beer to buying a home.
Food & prices
The journey behind your grocery bill
How farming, energy, transport and supermarket competition shape the price on the shelf.
Prices & inflation
Inflation is falling. What happens next?
What slower price rises mean for wages, purchasing power and economic recovery.
Shared prosperity
What would shared prosperity look like?
Beyond GDP: how we could measure economic success through security, opportunity and living standards.
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