How much money does the UK government borrow, and why does it matter?

Image source, Getty Images Published 21 November 2019 Updated 1 hour ago The UK government generally spends more than it raises in tax. To fill this gap it borrows money, but that has to be paid back - with interest. Why does the government borrow money? The government gets most of its income from taxes. For example, workers pay income tax and National Insurance , everyone pays VAT on certain goods, and companies pay tax on profits. It could, in theory, cover all of its spending from taxes and that sometimes happens. But, if it can't, the government covers the gap by raising taxes, cutting spending, or borrowing money. Higher taxes mean people have less money to spend, so businesses make less profit, which can be bad for jobs and wages. Lower profits also mean companies pay less tax. So, governments often decide to borrow to boost the economy. They also borrow to pay for big projects, like new railways and roads. How does the government borrow money? The government borrows money by selling financial products called bonds. A bond is a promise to pay money in the future. Most require the borrower - in this case, the government - to make regular interest payments. UK government bonds - known as "gilts" - are normally considered very safe, with little risk the money will not be repaid. Gilts are mainly bought by financial institutions in the UK and abroad, such as pension funds, investment funds, banks and insurance companies. The government sells short and long-term gilts to allow it to borrow money over different time periods, with varying interest rates. How much is the UK government borrowing? Government borrowing was £16bn in June 2026 , according to the latest data from the Office for National Statistics (ONS), which was down £7.9bn from the same month last year. The amount the government borrows fluctuates from month to month. For instance, it tends to borrow less in January, when many people pay a large chunk of their annual tax bill. So, it can be more helpful to look across a whole year, or the year-to-date. In the full financial year to March 2026, the government borrowed £128bn. The total amount the government owes is called the national debt. Public sector net debt currently stands at nearly £3 trillion. That is almost as much as the value of all the goods and services produced in the UK in a year, known as the gross domestic product, or GDP. The current level is more than double that seen from the 1980s through to the financial crisis of 2008. The combination of the financial crash and the Covid pandemic pushed the UK's debt up. But, in relation to the size of the economy, UK debt figures are still low compared with much of the last century. They are also less than the equivalent figures for some other leading economies. What is GDP and how fast is the UK economy growing? Published 5 days ago UK faces biggest hit to growth from Iran war of major economies, IMF says Published 14 April How much money does the government pay in interes