The cost of past promises
That’s how much Britain spent servicing its debts in 2024–25. It works out at £291 million every day.
More than the Home Office (£23bn), Justice (£14bn), and Transport (£30bn) combined.
A bill that tripled in three years
Debt interest was £6bn in 1978 and stayed between £20–40bn for decades. Then, between 2020 and 2023, it tripled — driven by soaring inflation and rising rates.
Debt ratcheted up with every crisis
Debt as a share of GDP was just 22% in 1990. Each crisis — ERM, the financial crash, COVID — pushed it higher. It never came back down.
Now it stands at ~97% of GDP. But for a decade, it didn’t seem to matter — because interest rates were so low.
The ‘free money’ era ends
This chart reveals the great decoupling. After 2008, debt doubled — but the interest bill barely moved because rates were slashed to near zero.
Politicians took cheap debt as a signal to keep borrowing. Then rates rose, and the bill arrived. Debt interest exploded while debt growth actually slowed.
The hidden bill: Quantitative Easing
From 2009, the Bank of England bought £875bn of government bonds through its Asset Purchase Facility (APF) to push down yields. It worked — for a while.
But the Bank funded these purchases with reserves that pay Bank Rate. When rates hit 5.25%, the Bank started losing money on every bond it held. The Treasury had promised to cover all losses.
The APF indemnity — taxpayers covering the Bank’s losses — went from £0 to £71bn in a single year.
The programme that was meant to save money
Cumulative APF indemnity payments from the Treasury to the Bank since 2020 now exceed £370 billion — more than the entire annual budget of the NHS.
The programme designed to make borrowing cheaper has become one of the largest single costs in the public finances.
The forecast: no relief in sight
The OBR forecasts debt interest continuing to climb toward £140bn by 2029–30. Even as the deficit narrows, the interest bill keeps rising — because the enormous stock of gilts issued at low rates is being refinanced at higher yields.
The structural trap
Every pound spent on interest is a pound that cannot be spent on schools, hospitals, or defence. Debt interest now takes nearly 10p of every pound the government collects in tax.
The more you spend on interest, the less you have for services, the more you need to borrow, and the more interest you pay. That is the trap.