Official figures show that the UK's public sector net debt reached £2.985 trillion by the end of July 2026. This amount is equivalent to 94.1% of the total value of goods and services produced by the UK economy annually.
The Office for Budget Responsibility estimated that net debt interest costs for 2025/26 would be approximately £110 billion. This means a significant portion of public funds must be allocated to servicing previous borrowing before it can be spent on public services such as schools, healthcare, or policing.
Government debt increases when public spending exceeds the revenue collected through taxes and other income. Factors contributing to this growth over the past two decades include the 2008 financial crisis, the covid era, rising energy prices, and increasing interest rates. An ageing population also contributes to higher spending on the State Pension, healthcare, and certain benefits.
While governments routinely refinance borrowing, the more money spent on servicing existing debt, the less flexibility there is to fund services, reduce taxes, or respond to future emergencies.