That approach seems a big ask given the current size of the UK government’s debt burden, which stands at around £2.9 trillion. This second image depicts the growth of our total national debt. That’s exploded in recent years due to a perfect economic storm of repressed displacement. The financial crisis of 2008 and the Covid-19 pandemic had significant impacts on this increase. Consequently, debt levels have more than doubled relative to what we experienced from the 1980s through the financial crisis.
If last full financial year, which ended March 2024, borrowing by the UK government was £152.6 billion. This borrowing serves as a testament to their continued work to address the mounting economic burden. This near-term borrowing has very real implications for future fiscal policies and economic stability. As debt builds up, so do interest payments. By November 2025, these payments exceeded £3.4 billion.
UK government bonds, known colloquially as “gilts,” have long been considered one of the most safe-haven assets. That’s why investors such as pension funds, banks, investment funds, and insurance companies buy these bonds with confidence. It’s because they have confidence that their money will be returned. This sense of safety is important for keeping up investor confidence in the federal government’s capacity to honor its debts.
Japan’s total debt is indeed high, but it’s very low when we compare it to the size of the overall economy. Historically speaking, these debt levels are even much lower than those of the last century. Now, economists are sounding the alarm over long-term interest rates set to skyrocket in January. They warn that unless these trends change, the UK government is at risk of not meeting its borrowing targets.
The new Chancellor, Rachel Reeves, has recently changed the method by which the government calculates its debt to encourage more investment. Labour has pledged to cut the overall sum due over five years. Under this new rubric, this debt will shrink relative to the size of the economy. This change would go a long way towards balancing important, productive borrowing to make long-term investments with accountability and fiscal discipline.
In November 2021, public sector net borrowing was £7.4 billion. By November 2025, that number increased to £11.7 billion. These figures indicate a continued trend of borrowing amid fluctuating economic conditions and highlight the ongoing need for careful fiscal management.
How the government tackles this challenging short-term situation will be a key test of its determination to maintain long-term economic stability.
“There is no doubt about the government’s commitment to economic stability.” – Downing Street
The UK government is in a deep fiscal hole. This is especially important for the short time that policymakers and investors are focused on the national debt’s bad effect. Deficits and surpluses play an enormous role in determining the trajectory of overall debt. When deficits happen, debt increases. Surpluses, in contrast, allow for the debt to be paid down.