The UK government already has a national debt of about £2.8 trillion. This is the total amount the federal government currently owes. It is directly affected by all the ticklish economic variables, starting with the annual deficit or surplus. Just this week, we learned that UK government borrowing hit £17.5 billion in March 2023 alone. This would be a real terms increase on last year’s £16.4 billion figure. Borrowing has skyrocketed as it has stretched much more broadly by an economic challenge. Things such as the 2008 financial crash and the Covid-19 pandemic have had similar impacts on massively increasing the national debt within the years.
In just March, borrowing was up by £2.8 billion on the same month last year. This trend indicates ongoing fiscal pressures. The national debt grows every time the federal government spends more than it receives in revenue, thus running a deficit. Conversely, it grows in years of plenty, when revenue exceeds spending.
Chancellor Rachel Reeves does just that in her recent to redefine public sector net debt. This new provision makes possible a lot more flexibility in how to raise money for that investment. We’d finally see the government stand firm on a vital rule established by past administrations — just as we’re headed to a Supreme Court showdown over it. This rule requires total debt to fall as a share of the UK economy within five years.
The UK’s national debt hit a historic high of 100% of gross domestic product (GDP). GDP is the combined value of everything produced in the UK every year. This unprecedented level of debt is greater than what we experienced dating back to the 1980s up until the 2008 financial crash. It does paint a clear picture of a dramatic turn in the country’s fiscal picture.
Even with these very high figures, UK government debt is still relatively low by the standards of much of the last century. UK government bonds, or “gilts” as they’re known, are considered one of the safest investments in the world with near zero default risk. These legendary gilts excite an incredible range of potential buyers. Financial institutions such as pension funds, banks, domestic and foreign investment funds, and insurance companies are panting at the opportunity to invest.
The new numbers show that the UK government borrowed a record smashing £151.9 billion. This figure represents the annual sum for the last complete fiscal year, which ended in March 2025. This massive number is representative of the federal government’s struggle to reign in its fiscal responsibilities while juggling an influx of economic headwinds.
Downing Street has assured citizens of “no doubt about the government’s commitment to economic stability,” signaling a determination to navigate these turbulent financial waters effectively.
Economic growth, fiscal consolidation plans and the impact of the pandemic are the most significant factors behind the UK’s national debt. Together, these factors will continue to shape its trajectory moving forward. As Chancellor Reeves implements new policies regarding debt management and investment, stakeholders will be closely monitoring how these changes affect future borrowing and overall economic health.