The UK has borrowed too much money, has a massive debt - £105 billion goes on paying our debt interest

[cakeorwine]

A good visual guide from the Guardian

https://www.theguardian.com/uk-news/ng-interactive/2025/mar/24/visual-analysis-how-the-markets-boxed-in-rachel-reeves

But basically, the UK has had to rely on borrowing money as it spends more than it brings in.

It has borrowed money at low interest rates - but these rates have increased.

£105 billion on servicing debt interest. When you are borrowing a lot of money, even a small change in the interest level will massively increase the actual amount of money we need to pay on interest

Some context from the OBR on the budget

https://obr.uk/forecasts-in-depth/brief-guides-and-explainers/public-finances/

Income: £1149 billlion
Spending: £1276 billion
Of which £104 billion is on interest payments
Deficit: £127 billion

We need either more income, less spending and reduced interest payments.

How do we compare to other countries - that's the key? This info on it's own means nothing.

I had a look at the ‘what we’ve spent your tax on’ section on HMRC for both DH and I recently. I was slightly horrified at the amount that was being spent on debt interest.

It means quite a lot when we are talking about budgets and how a slight change in interest will affect what we can spend on other stuff against a limited income.

And if we have to borrow more to cover the deficit, then clearly that borrowing is affected by the cost of borrowing.

I vaguely feel thats why we need inflation, to inflate the debt away. But I am probably wrong.

Us and nearly everyone else. Been like this for many years and covid exacerbated it

This is a large part of why disability payments at the current level are unaffordable and borrowing to give people benefits is the wrong answer. This is what all of those people who think Labour are evil for tackling the soaring benefits bill fail to comprehend. The country is totally economically f’d.

True

But this does give some context to when we are talking about how we are spending our money and where we get our money from.

It doesn't take much change in borrowing costs to significantly change our interest payment costs.

What does it matter what sort of debt other countries have? Britain is not as bad as some others but still in pretty dire straights. If you have a massive credit card bill it’s of no help to you if all your friends have a massive credit card bill too. You still have to deal with the massive credit card bill.

Is the organisation which holds the debt actually putting any pressure on for repayment? (For us and everyone else)

Or is it that, yet again, political parties are putting in "targets"... "no borrowing for day to day costs" is usually there... "reduce the borrowing burden by end of term" ... those sorts of things.

Are there any actual consequences?

It’s like living on credit cards, expensive. The problem is every time they try to cut something to balance the books someone starts shouting about it and no one wants to make really unpopular decisions. At the end off day there are people at the other end of all those numbers and they have emotive stories.

a bit like council budgets everyone knows they are overspending but most of that money goes in statutory spending and care packages for elderly and for adults with disabilities and children with disabilities/ sen. Thinking about my own household I pay £2k. Obviously I cost them money too but possibly not £2k maybe there is £500 quid left so to support one elderly person in a care home you need maybe 100 households a year. I don’t think the numbers stack up.

It's not one organisation.

As far as I understand, countries say "Can you lend us some money, we're good for repaying the interest on it", the Government gets lent money and pays interest on it.

I don't know if they ever actually pay the actual money back, or whether it's just interest they pay back.

I am sure it's way more complicated than that - but countries need to borrow money (for a range of reasons) and have a credit rating and a cost to servicing that interest.

Look at what happend in Greece or Venezuela for what happens when these debts are defaulted (or threaten to be defaulted). Or what happend to the UK when the debtors just started to lose trust in the UKs financial abilities https://en.wikipedia.org/wiki/October_2022_United_Kingdom_government_crisis

The UK government issues bonds calls gilts. You can buy a UK gilt and in doing so are entitled to a set interest rate a year as well as repayment at the end of the gilt period. So for instance you could buy a 10 year gilt currently at 4.72%. For 10 years you’d get 4.72% back as interest on whatever you invest and in 10 years time you’d get your money back. If you wanted your money back after 3 years you could sell the gilt to another investor.

UK gilts usually have a fairly low interest rate as the Bank of England has an excellent reputation for repayment.

Investors are usually pension funds, insurers or other countries.

And yet they persist with HS2. Classic example of Sunk Cost Fallacy. It will cost at least £150 billiion for very debatable outcomes

It's not as simple as that though. Because "boosting income" usually costs money and increases debt, and "cutting spending" usually has knock-on effects that reduce income.

Yes ideally we should balance these figures, but sometimes borrowing is the right thing to do.

Despite that eyewatering deficit, if a specific plan would cost an extra £20bn (which we don't have) but would boost income by £40bn per year (woohoo!) then it is sensible to borrow that extra £20bn if we can. What is important is not the size of the deficit but (a) whether our credit rating is good enough that we can still borrow when we want to and (b) whether those with the power are having the good ideas which will lead to growth and higher national income.

How much tax does Amazon not pay? And others for that matter.

It pays all the tax it is legally due to pay in the UK. Stop whining.

I agree - borrowing for projects that will cause growth is important.

Just as say borrowing to buy a car so you can get to a well paid job is an investment.

However - £105 billion is a massive amount of money when we are talking about other things we spend money on and cuts we are making elsewhere.

And RR keeps on borrowing more money. Last time to give civil servants an above inflation pay rise. It's very scary. S&P have already downgraded UK creditworthiness since RR Autumn budget. She's also lost her headroom cash by increasing taxes on Non Dom's and now many of these wealthy people have moved to other countries where they pay less tax but still massive amounts of tax, RR did not foresee this in her budget planning so thought she'd squeeze them for far more cash but naively thinking they would not move out of GB. Also taxing businesses more in their NI contribution will cause massive job cuts but RR doesn't care about that either, causing both inflation and unemployment to rise. I wish she'd be sacked only I don't know who else Labour have got who understands economics.

Is there a chart or list of how much debt other countries have?
I’m wondering what the US debt is like, and other European countries. Also, how do we compare to countries such as Brunei, Cyprus, Saudi, Qatar?

Pressed too soon. Much as dislike Tory's Hunt was a fat better Chancellor and he did at least have economy on track and understood his actions have consequences.

This is why privatisation is such an abject failure. Any profits that are made with state owned infrastructure go straight back to the Exchequer, when they're privatised they go straight into shareholder profits whilst investment in said infrastructure is virtually nil.

We've been selling stuff for years to balance the books. It's a short term fix in the year it's sold because it makes the books look better. But after that, it gets a little bit shitter year on year.

Britain is unique among Western democracies in that regard.

looking at government borrowing also perfectly illustrates what an idiot Liz Truss was. Announce crazy policies, the government looks like it’s being run but a nutter, no one wants to let us borrow as they think the UK might go bankrupt, our interest rate soars as we look uncreditworthy. Cheers Liz!