Islington Council has reported a strong treasury management outturn
for the financial year ending March 31, 2026, with better-than-expected returns on invested funds contributing to a surplus of £8.5 million on the General Fund. The positive financial performance was driven by stronger-than-anticipated returns on reserves and short-term cash flow.
Councillor Paul Convery, Executive Member for Finance, presented the Treasury Management Outturn report, stating that the council's borrowing, lending, and cash flow management have been in very good condition indeed.
He noted that the council had externally borrowed less than anticipated. The council had initially planned to borrow £162.216 million throughout 2025/26, but this was reduced to £64.619 million due to a decrease in capital expenditure. Ultimately, the council borrowed £57 million (including a replacement loan), as higher-than-expected cash balances and interest rates towards the end of the financial year made it more prudent to wait for a better opportunity to reduce interest rate risk.
The financial year was characterised by a challenging environment with high gilt rates and uncertainties in interest rates,
according to the Treasury Management Outturn Report 2025/26. Capital Economics reported in March 2026 that Gilts have been under huge pressure since the start of the war in the Middle East and this update sketches out how much more pressure they might come under if the war were to drag on.
Furthermore, the Bank of England noted that Conflict in the Middle East has caused a significant increase in global energy and other commodity prices, which will affect households' fuel and utility prices and have indirect effects via businesses' costs.
The report also acknowledged potential future risks, particularly the volatility of interest rates, which are further elaborated upon in the appendices along with an overview of the prevailing economic environment. The full Treasury Management Outturn Report 2025/26 can be found here.
