UK National Debt Explained: £3 Trillion and Rising

By Matt, Editor

UK public sector net debt passed £3 trillion for the first time in September 2026. It reached a provisional £3,005.0bn, or 94.0% of GDP, according to the Office for National Statistics, a level last seen in the early 1960s. The state spent about £110bn on debt interest in 2025–26, and 30-year borrowing costs have hit their highest level since 1998. This is the UK national debt explained: what it is, how it got so big, who owns it and why it matters to every taxpayer.

What is the UK national debt?

The national debt is the total amount the government and the wider public sector owe, after subtracting their liquid assets such as cash. It builds up because the government has spent more than it raised in tax almost every year for decades. Each year’s shortfall, the deficit or “borrowing”, is added to the stock of debt.

The ONS publishes several measures. The headline figure, public sector net debt excluding public sector banks, is the one that passed £3 trillion. The government’s debt rule instead targets a broader measure, public sector net financial liabilities (PSNFL), which also counts some illiquid financial assets. That makes the debt look smaller: £2,643.4bn, or 82.7% of GDP.

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Measure	End of September 2026	Share of GDP
Public sector net debt (headline, PSND ex)	£3,005.0bn	94.0%
Public sector net financial liabilities (PSNFL)	£2,643.4bn	82.7%
General government gross debt	£3,231.9bn	—
Borrowing, April–September 2026	£97.8bn	£6.0bn above forecast
Borrowing, September 2026	£24.5bn	—

How did the debt reach £3 trillion?

It took more than three centuries for the debt to reach its first trillion pounds, in February 2010. The second trillion took ten years, arriving in June 2020. The third took just over six. The big jumps came from three shocks: the 2008 financial crisis and bank bailouts, the Covid-19 lockdowns and furlough scheme, and the 2022 energy price support. Between them, governments of every party have run deficits even in good years and allowed spending to keep growing.

Rising interest rates have added to the bill. Once borrowing costs rose after 2022, the cost of servicing the existing debt rose with them. In September 2026 alone, central government debt interest payable was £10.9bn, according to the ONS. We covered the milestone in Britain’s £3 trillion debt crisis.

Who owns UK government debt?

Most government debt takes the form of gilts, which are bonds sold by the Debt Management Office. At the end of 2025, according to ONS data published in the DMO’s Quarterly Review, gilts worth £2,239.2bn at market value were held as follows:

Holder	Share	Value
Overseas investors	32.9%	£737.4bn
Insurance companies and pension funds	20.0%	£446.9bn
Other financial institutions and private companies	19.3%	£431.8bn
Bank of England (Asset Purchase Facility)	17.8%	£398.7bn
Banks and building societies (monetary financial institutions)	9.8%	£220.4bn
Households and non-profit institutions	0.1%	£3.0bn

Almost a third of gilts are held overseas, which leaves Britain dependent on the confidence of foreign investors. Overseas holdings rose by about £48bn during 2025 alone, from £689.1bn in the first quarter to £737.4bn in the fourth.

How much does debt interest cost?

The Office for Budget Responsibility puts debt interest at about £110bn in 2025–26, making it the third-largest area of public spending after health and welfare. That is money spent on servicing past borrowing rather than on public services or tax cuts. The OBR’s March 2026 forecast has central government debt interest at £109.4bn in 2026–27, rising to £137bn by 2030–31. Its October 2026 Budget forecast puts debt interest spending at £124bn in 2026–27, rising to £160bn in 2031–32. The OBR also notes that UK 10-year government borrowing costs have reached the highest in the G7.

Markets have pushed those costs higher still. On 1 October 2026 the 30-year gilt yield climbed to 6.029%, its highest since January 1998, and the 10-year yield reached 5.509%, its first time above 5.5% since July 2007, according to This is Money, as we reported in UK borrowing costs pass 6%. Higher yields feed through to the interest bill as old debt is refinanced.

What are the parties saying?

Chancellor John Healey delivered his first Budget on 28 October 2026. The OBR now forecasts the tax burden will hit a record 37.9% of GDP in 2027–28 and 38.6% by 2031–32, and Healey’s measures add £8bn to borrowing this year (see our Budget 2026 explainer). Reform UK’s Shadow Chancellor Robert Jenrick said after the September figures: “We simply cannot carry on like this. Debt is out of control and the tax burden is at post-war highs. Reform has laid out a plan to save more than £80 billion a year.” He said Reform would use the savings to cut both debt and taxes by taking control of the welfare bill, ending “Net Zero vanity projects” and scrapping foreign aid to rich countries. Reform’s wider programme is in our Reform UK policies explainer.

What do supporters and critics say?

The case for borrowing

Defenders of higher borrowing argue that debt is not unusual by international standards: several G7 countries owe more relative to the size of their economies, and Britain’s debt was far higher after the Second World War. They say borrowing to invest can raise growth, and that cutting spending sharply during a slowdown can do more harm than good.

The case against

Critics answer that the comparison misses the point. Britain is paying more to borrow than its peers, the interest bill is now one of the largest lines in the budget, and the debt is being run up mainly to fund day-to-day spending, not investment. Every pound spent on interest is a pound that cannot go on defence, the police or lower taxes. The real answer is to shrink the state, cut waste and get growth going, rather than keep putting up taxes on the people who already pay for it all. The IMF has also warned about the trajectory, as we reported on the IMF’s debt warning.

Why does it matter?

Debt is deferred taxation. A large and growing debt means higher taxes or lower spending in future, leaves less room to respond to the next crisis, and makes the government more vulnerable to sudden shifts in market sentiment. The OBR’s long-term projections show pressures from an ageing population, including State Pension costs, pushing debt higher over the coming decades unless policy changes.

What happens next?

The OBR’s forecast published with the Budget on 28 October 2026 has public sector net debt peaking at about 97% of GDP in 2028–29 and borrowing falling to 1.8% of GDP in 2030–31. The ONS publishes the October public finances figures next month. Markets will judge whether Healey’s plans are credible, and gilt yields will show the verdict. Under the fiscal rules set by Rachel Reeves in 2024, PSNFL must fall as a share of GDP by 2029–30. Healey kept them: the OBR says the main rule is met by £15bn in 2029–30 and the PSNFL target by £24bn.

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Frequently asked questions

How big is the UK national debt?

As of the end of September 2026, public sector net debt was £3,005.0bn, or 94.0% of GDP, according to the ONS.

When did UK debt pass £3 trillion?

The ONS figures for September 2026, published on 21 October 2026, showed the debt above £3 trillion for the first time. The figure is provisional and may be revised.

What is the difference between the deficit and the debt?

The deficit is how much the government borrows in a single year. The debt is the total stock of borrowing built up over time.

How much interest does the UK pay on its debt?

The OBR estimates debt interest at about £110bn in 2025–26, and its March 2026 forecast put it at £109.4bn in 2026–27. In September 2026 alone, central government debt interest payable was £10.9bn, according to the ONS.

Who owns UK government debt?

At the end of 2025, overseas investors held 32.9% of gilts, insurers and pension funds 20.0%, other financial institutions 19.3% and the Bank of England 17.8%, according to the DMO.

Is UK debt the highest it has ever been?

In cash terms, yes. As a share of GDP it is at its highest since the early 1960s, but it was much higher after the Second World War.

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Sources

• ONS – Public sector finances, UK: September 2026
• Office for Budget Responsibility – Fiscal risks and sustainability, July 2026
• UK Debt Management Office – Quarterly Review, January–March 2026
• Office for Budget Responsibility – Fiscal risks and sustainability, July 2026 (PDF)
• Office for Budget Responsibility – Economic and fiscal outlook, March 2026
• HM Treasury – Charter for Budget Responsibility approved by Parliament (January 2025)
• This is Money – UK borrowing costs rise to highest level since 1998 (1 October 2026)
• Reform UK – UK debt soars past £3 trillion (21 October 2026)