Debt interest is the cost the government pays on its borrowing. It mostly comprises interest paid on government bonds, which are financial products sold by the government to raise money. As public sector net debt continues to grow, reaching a record high of nearly £2.7 trillion in 2023-24,[1] spending on debt interest has become a significant and recurring proportion of public spending, reducing what is available for other priorities.
With a targeted approach to reduce public sector net debt, and therefore debt interest obligations, the government would be able to reprioritise funding to more pressing issues for the public such as funding public services and reducing the tax burden.
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Key findings
- Central government debt interest cost £102.2 billion in 2023-24, down from the record high of £111.5 billion in 2022-23.[2]
- This is forecast to fall to £88.9 billion by 2025-26, before rising again to £109.6 billion by the end of the forecast period in 2028-29.[3]
- If it were a stack of 50 pound notes, the 2023-24 debt interest would be 26 times the height of Mount Everest.[4],[5] In one pound coins, it would fill 63 Olympic sized swimming pools.[6],[7]
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[1] Office for Budget Responsibility, Public finances databank – June 2024, 5 July 2024, obr.uk/download/public-finances-databank-june-2024/, (accessed 19 July 2024).
[2] Ibid.
[3] Ibid.
[4] National Geographic, Mount Everest, education.nationalgeographic.org/resource/mount-everest/, (accessed 24 July 2024).
[5] Moorhead, J., HERE WE OWE! This is what our £2 trillion debt would look like piled up in Wembley stadium, The Sun, 5 March 2021, www.thesun.co.uk/news/14250955/this-is-what-our-2-trillion-debt-would-look-like-piled-up-in-wembley-stadium/, (accessed 24 July 2024).
[6] Moak, J., Olympic Swimming Pools, Phinizy Center for Water Sciences, phinizycenter.org/olympic-swimming-pools/, (accessed 24 July 2024).
[7] The Royal Mint, £1 Coin Designs and Specifications, www.royalmint.com/discover/uk-coins/coin-design-and-specifications/one-pound-coin/, (accessed 24 July 2024).