How much money does the UK government borrow, and why does it matter?
Summary
The UK government often spends more money than it gets from taxes and borrows money to cover the gap. It borrows by selling bonds called gilts, which it must repay with interest. The government's total debt is nearly £3 trillion, roughly equal to the value of all goods and services the UK produces in a year.Key Facts
- The UK government borrows money when taxes do not cover all spending.
- It borrows by selling bonds called gilts, which are promises to pay back money with interest.
- Government borrowing was £16 billion in June 2026, down from the previous year.
- For the full financial year ending March 2026, borrowing totaled £128 billion.
- The total UK national debt is about £3 trillion, close to the country’s annual economic output (GDP).
- Debt levels rose significantly after the 2008 financial crisis and the Covid pandemic.
- Interest payments on the debt were £11.8 billion in June 2026, one of the highest ever for that month.
- Interest rates increased after 2021, raising government debt costs, with uncertainty about future rate changes due to global events like the Iran war.
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