The UK's fiscal targets

Since the 1990s UK governments have adopted targets to constrain its management of the public finances. The public finance targets (or fiscal targets) have changed regularly but they have generally focused on government borrowing and government debt. The latest targets are included in the Charter for Budget Responsibility (the Charter), which came into force in February 2026, after the House of Commons voted to approve it.

What measures do the targets focus on?

The fiscal targets focus on the government’s day-to-day budget (or current budget) and public sector net financial liabilities.

The day-to-day budget (current budget)

The current budget measures the difference between government current spending – day-to-day spending on running public services, grants and administration – and government revenues from taxes and other sources. The current budget excludes investment spending.

Broadly speaking, the current budget measures the extent to which government revenues cover the cost of public services today. It is sometimes referred to as the government’s day-to-day budget.

Public sector net financial liabilities

Since 1997, one of the UK’s fiscal targets has focused on public sector net debt. This is a stock measure of the amount the government owes from all previous borrowing. Public sector net financial liabilities (PSNFL) are also a stock measure but include a wider range of the government’s liabilities and assets than public sector net debt. PSNFL is a broader measure of the government’s balance sheet.

In addition to the assets and liabilities included in public sector net debt, PSNFL includes the assets and liabilities of funded public sector pension schemes, illiquid assets such as loans (including student loans) and other financial liabilities.

The government describes PSNFL as “net financial debt”.

Source: ONS. Public sector balances sheet tables: Appendix N and public finances databank – February 2026

What are the fiscal targets?

Initially, the targets are that in the forecast for 2029/30:

• the day-to-day budget (or current budget) should be in surplus. This means that government’s day-to-day spending should be met by its revenues. The government would, therefore, be forecast to only be borrowing for investment (capital) spending.
• public sector net financial liabilities should be falling, relative to the size of the economy, compared with the previous year (2028/29). The government describes public sector net financial liabilities as ‘net financial debt’.

From 2026/27, once 2029/30 becomes the third year of the forecast, the target year will become the third year of the forecast.

The rule on the current budget is the government’s main target or ‘fiscal mandate’.

The government also has a welfare cap, which is a supplementary target that sets limits on the amount that can be spent on certain social security benefits and tax credits. The welfare cap was first introduced in 2014.

Are the targets being met?

The Office for Budget Responsibility (OBR), the UK’s public finances watchdog and producer of the official forecasts, reports on whether the targets are being met. From 2025/26, this assessment is being made once a financial year, at the Budget.

In its November 2025 forecast, the OBR said that both the current budget and public sector net financial liabilities targets were being met, with a 59% and 52% probability, respectively.

Source: OBR, Economic and fiscal outlook – November 2025, Chart 7.1