Annual Debt Interest Payments 1990–2031 (£bn)
Historical (£bn)
OBR Forecast (£bn)
As % of GDP (right axis)
⚠️ 2025/26 interest payments of £110bn are among the highest in 50 years as a share of public spending — driven by the surge in index-linked gilt payments during the 2022–23 inflation spike and higher Bank Rate increasing QE costs. The OBR forecasts this will gradually ease but remain historically elevated through to 2031.
Historical Annual Interest Payments
| Year | Interest (£bn) | % of GDP | % of Spending |
|---|---|---|---|
| 1990/91 | £19bn | 3.1% | 7.0% |
| 1993/94 | £24bn | 2.6% | 8.1% |
| 1996/97 | £27bn | 3.2% | 7.9% |
| 2000/01 | £22bn | 2.2% | 5.9% |
| 2003/04 | £24bn | 2.0% | 5.6% |
| 2006/07 | £30bn | 2.1% | 5.7% |
| 2007/08 | £31bn | 2.0% | 5.6% |
| 2008/09 | £32bn | 2.2% | 5.3% |
| 2009/10 | £31bn | 2.2% | 4.7% |
| 2010/11 | £56.7bn | 3.0% | 6.8% |
| 2011/12 | £48bn | 3.0% | 7.1% |
| 2012/13 | £51bn | 3.1% | 7.3% |
| 2013/14 | £52bn | 3.0% | 7.4% |
| 2014/15 | £53bn | 2.9% | 7.4% |
| 2015/16 | £49bn | 2.6% | 7.0% |
| 2016/17 | £49bn | 2.5% | 6.9% |
| 2017/18 | £49bn | 2.3% | 6.7% |
| 2018/19 | £52bn | 2.3% | 6.9% |
| 2019/20 | £52bn | 2.2% | 6.2% |
| 2020/21 | £56.7bn | 2.1% | 4.1% |
| 2021/22 | £69bn | 2.8% | 5.8% |
| 2022/23 | £116bn | 4.4% | 9.3% |
| 2023/24 | £105bn | 3.8% | 8.5% |
| 2024/25 | £100bn | 2.6% | 8.0% |
| 2025/26 | £110bn | 3.6% | 8.1% |
OBR Forecast 2026–2031 ◐ Forecast
| Year | Interest (£bn) | % of GDP | % of Spending |
|---|---|---|---|
| 2026/27 | ~£105bn | ~3.3% | ~7.8% |
| 2027/28 | ~£102bn | ~3.1% | ~7.5% |
| 2028/29 | ~£100bn | ~3.0% | ~7.2% |
| 2029/30 | ~£98bn | ~2.9% | ~7.0% |
| 2030/31 | ~£96bn | ~2.8% | ~6.8% |
📋 OBR forecasts are based on current gilt yields, Bank Rate assumptions and RPI inflation projections. A sustained 1% rise in gilt yields would add approximately £20–25bn per year to the interest bill within 5 years as gilts mature and are refinanced at higher rates.
⚠️ Forecasts made prior to the escalation of Middle East conflict in Feb/Mar 2026. Higher energy prices and inflation could significantly worsen the outlook. See our Future Interest Scenarios page →
What £110bn Per Year Could Buy — The Opportunity Cost
NHS England
£192bn total
All Schools (Eng)
£77bn · 1.4×
Defence Budget
£54bn · 2×
Police (England)
£16bn · 6.9×
Roads & Transport
£20bn · 5.5×
🚨 The UK now spends more on debt interest alone (£110bn) than on all secondary and primary education in England (£77bn). Every pound paid in interest is a pound that cannot be spent on public services. Interest payments are the third-largest item of government expenditure — behind only welfare and health.
Who Receives the Interest Payments?
📋 The Bank of England holds gilts purchased under QE and remits the interest to HM Treasury — however, as rates rose, the BoE began making net losses on its QE portfolio, requiring taxpayer compensation payments instead. See the BoE Bond Programme page →
Why Did Interest Payments Surge in 2022/23?
⚠️ Around 25% of UK gilts are index-linked — their interest payments rise with RPI inflation. When RPI hit 14.2% in 2022, this triggered an extra £60bn+ in payments. This is structurally unlike most other G7 nations and makes the UK uniquely exposed to inflation shocks. The share of index-linked debt is gradually being reduced by the Debt Management Office.
Interest Rate Sensitivity — Impact of +1%, +2%, +3% and +4% Rise in Gilt Yields
OBR Base Case (current rates)
+1% on all new gilt issuance
+2% on all new gilt issuance
+3% on all new gilt issuance
+4% on all new gilt issuance
+£22bn
Extra/yr by 2031
at +1% gilt yields
at +1% gilt yields
+£44bn
Extra/yr by 2031
at +2% gilt yields
at +2% gilt yields
+£66bn
Extra/yr by 2031
at +3% gilt yields
at +3% gilt yields
+£88bn
Extra/yr by 2031
at +4% gilt yields
at +4% gilt yields
🚨 How this works: With an average gilt maturity of ~15 years, roughly 6–7% of the total gilt stock (~£180–200bn) matures and must be re-issued every year at current market rates. A sustained 1% rise in yields therefore adds ~£2bn to the annual bill per year of refinancing — building to ~£22bn extra per year after 5 years. At +4%, the additional annual cost by 2031 would exceed the entire UK defence budget.
⚠️ Key assumption: Rate rises are sustained and apply to all new issuance from 2026. The impact builds gradually as old lower-rate gilts mature and are replaced — the full effect takes ~12–15 years to fully flow through. Index-linked gilts (25% of the stock) add further exposure if inflation also rises simultaneously.
International Comparison — Debt Interest as % of GDP (2025)
🇬🇧 UK
3.6%
🇺🇸 USA
~3.2%
🇫🇷 France
~1.9%
🇩🇪 Germany
~1.2%
🇯🇵 Japan
~1.6%
🇮🇹 Italy
~3.8%
📊 The UK's interest burden is high by G7 standards — partly due to the large index-linked gilt stock and partly due to the high overall level of debt. Germany, which kept debt much lower and has no index-linked gilt programme, pays roughly a third of what the UK pays as a share of GDP.