Briefing: the real national debt

The chancellor recently unveiled his budget for the coming financial year. The figures from the Office for Budget Responsibility showed the national debt will increase to £2.5 trillion next year.[1] Yet this is only part of the picture with regard to the UK’s debt.

A fuller picture of the UK government’s liabilities should be regularly reported: the real national debt. This incorporates areas of future spending which are not formally recognised in either the whole of government accounts or the monthly public sector finances bulletin published by the Office for National Statistics (ONS). The basic state pension and many public sector workers’ pensions are not formally counted as a liability, since they are only recognised when they fall due.[2] Yet these two combined are likely to reach £6.8 trillion in the next financial year.

Compared to many other rich countries, the UK is fortunate to have much longer dated government issued debt;[3] almost 40 per cent of conventional gilts mature in more than 15 years.[4] This means the modified duration – the change in the value of a debt security relative to a change in interest rates – is more manageable for the UK government. The cost of borrowing and servicing debt has also declined markedly, with many short-term gilt yields at or slightly above zero per cent.[5]

But this does not mean that borrowing and servicing debt will remain cheap forever. Given the size of the liabilities, they present a challenge to the long-term stability of the public finances – for example, if interest rates were to rise and if the public sector workforce continues to grow. A plan for prudent management of all liabilities – and not just public sector net debt – must be an urgent priority for the government after the pandemic.

Click here to read the briefing note.

Key findings

  • In 2021-22 the real national debt will be £9.6 trillion. This is almost twice the economic output of the continent of Africa, which is £4.9 trillion.[6]

  • The real national debt is equivalent to more than four times the size of the UK economy, or 423 per cent of forecast nominal GDP.

  • On a per household basis, the real national debt will equate to £344,216. On a per person basis, it is £143,382.

  • The real national debt is made up of public sector net debt (PSND), unfunded state pension liabilities, unfunded public sector pension scheme liabilities, private finance initiative (PFI) and nuclear decommissioning

  • The official national debt (PSND) dramatically understates taxpayer liabilities. The real national debt is more than four times larger than this year’s forecast official national debt.


[1] Office for Budget Responsibility, Public finances databank – March 2021, 3 March 2021,, (accessed 3 March 2021).

[2] HM Treasury, Whole of Government Accounts 2018-19, July 2020, p. 59.

[3] Organisation for Economic Co-operation and Development, OECD Economic Surveys: United Kingdom, October 2020, p. 26.

[4] United Kingdom Debt Management Office, Gilt Market: Gilts in Issue on 2 March 2021, 3 March 2021,, (accessed 3 March 2021).

[5] Bloomberg, United Kingdom Rates & Bonds, 2021,, (accessed 3 March 2021).

[6] International Monetary Fund, GDP, current prices: Purchasing power parity; billions of international dollars, 2021,, (accessed 22 February 2021).   

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