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Area 4 of 10

Debt Interest

Monthly

£8.6bn

Share

11.1%

Per household

£287

Per person

£143

Trend

+£1.8bn (26%) since 2019/20

Data sourcesONS — Public sector finances, UKONS Statistics API (api.gov.uk)UK Debt Management Office — Gilt market dataHMRC — Tax receipts and National Insurance contributionsHMRC APIs (api.gov.uk)
exact ONS/HMRC/MHCLG/PSS fields

Why does the government pay interest?

  • Funding day-to-day spending

  • The cost of borrowing

  • Rates and debt levels

  • Market confidence

Inside the £8.6bn

Data sourcesONS — Public sector finances, UKONS Statistics API (api.gov.uk)UK Debt Management Office — Gilt market dataHMRC — Tax receipts and National Insurance contributionsHMRC APIs (api.gov.uk)
exact ONS/HMRC/MHCLG/PSS fields

Gilt Interest

£6.2bn

72.1% · £207/household

  • Long-term gilts
  • Index-linked gilts
  • Treasury bills

Index-Linked Gilts

£1.3bn

15.1% · £43/household

  • Index-linked coupon payments
  • Inflation indexation
  • RPI adjustments

Treasury Bills

£0.4bn

4.7% · £13/household

  • 1-month bills
  • 3-month bills
  • 6-month bills

Loans & Other Debt

£0.3bn

3.5% · £10/household

  • Loans from other governments
  • Public sector loans
  • Other debt instruments

Bank of England Losses (Interest)

£0.2bn

2.3% · £7/household

  • Reserve remuneration
  • Term funding scheme
  • Other BoE facilities

Other Interest Payments

£0.2bn

2.3% · £7/household

  • Interest on deposits
  • Payment adjustments
  • Other minor items

Debt interest is the third largest area of government spending.

Spending on debt interest has risen by £1.8 billion per month (+26%) since 2019/20.

UK government debt was £2.7 trillion at the end of 2024/25 (≈97% of GDP).

Higher interest rates mean higher borrowing costs.

Sources

Financial year 2024/25.