In November, the chancellor of the exchequer, Rachel Reeves, will deliver the budget. Attention will focus on the tax and spending measures announced, but alongside these, the Office for Budget Responsibility (OBR) will update its forecasts on the state of the public finances and its outlook for the economy. Central to this will be the level and trajectory of government debt. General government gross debt (GGGD) was 101 per cent of GDP in 2024-25,[1] while 30-year gilt yields reached 5.7 per cent in September 2025 - the highest level since 1998 - leaving the UK with the highest borrowing costs in the G7.[2],[3]
With the effective interest rate on government debt now exceeding sustainable GDP growth, even stabilising the debt requires primary budget surpluses of between 1 and 1.5 per cent of GDP.[4],[5] Instead, the UK ran a primary deficit of 2.2 per cent in 2024-25.[6] Consequently, debt interest payments are now above £100 billion a year,[7] and the OBR has warned that, without action, debt could rise to 270 per cent of GDP by the early 2070s.[8]
This note examines the scale of the challenge facing the government in reducing debt. It models four scenarios for reducing GGGD from 101 per cent to the Maastricht target of 60 per cent over 10, 15, 20 and 25 years. The 60 per cent benchmark, established by the 1992 Maastricht Treaty, represents the internationally recognised threshold for sustainable public debt.
This analysis is not a policy proposal. It does not attempt to say how surpluses would be achieved, whether through tax rises, spending cuts, or growth measures, nor does it account for recessions, political constraints, or future shocks. Its purpose is to provide a clear, credible estimate of the scale of fiscal adjustment required to reduce debt meaningfully under different timeframes.
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Key findings
- UK GGGD was 101 per cent of GDP, equivalent to over £2.9 trillion in 2024-25.[9]
- The OBR found that between 2019 and 2024, UK general government net debt rose by 17.9 percentage points, compared with an average rise of just 0.7 percentage points across advanced economies. [10]
- The UK had a primary balance deficit of 2.2 per cent of GDP, or £63 billion in 2024-25.[11] Reducing GGGD to the Maastricht Treaty benchmark of 60 per cent within:
- 10 years would require a primary annual surplus of 4.7 per cent of GDP, equivalent to £137 billion in 2025-26.
- 15 years would require a primary annual surplus of 3.2 per cent of GDP, equivalent to £94 billion in 2025-26.
- 20 years would require a primary annual surplus of 2.5 per cent of GDP, equivalent to £72 billion in 2025-26.
- 25 years would require a primary annual surplus of 2 per cent of GDP, equivalent to £59 billion in 2025-26.
- Achieving the 25-year scenario would require a total fiscal adjustment of 4.2 percentage points of current GDP - approximately £122 billion in 2025-26.
- Over 25 years, the cumulative primary surpluses required would total £2.7 trillion in nominal terms, equal to 92 per cent of the economy in 2024-25. Faster consolidation scenarios would reduce the cumulative costs.
- At 101 per cent of GDP, UK GGGD is above academic thresholds for sustainable debt. European Central Bank research found that the growth benefits of debt fade above 67 per cent of GDP, with interest rate pressures rising above 70 per cent. [12]
- Eight successive fiscal charters since 2011 promised falling debt, including the most recent, Rachel Reeves' Autumn 2024 charter. [13],[14] GGGD is now 24.8 percentage points higher than when the first charter was published.
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[1] Office for National Statistics, Government debt and deficit, 19 September 2025, www.ons.gov.uk/file?uri=/economy/governmentpublicsectorandtaxes/publicsectorfinance/datasets/governmentdeficitanddebtreturn/current/rftm17tables.xlsx (accessed 29 September 2025).
[2] Espiner, T. & Edser, N., UK borrowing costs hit 27-year high adding pressure on Reeves, BBC, 2 September 2025, www.bbc.co.uk/news/articles/cy989njnq2wo (accessed 1 October 2025).
[3] Smith I. & Fleming, S., Why are UK borrowing costs so high?, Financial Times, 30 August 2025.
[4] Aikman, D., Some Unpleasant Fiscal Arithmetic, National Institute of Economic and Social Research, 26 September 2025, niesr.ac.uk/blog/some-unpleasant-fiscal-arithmetic (accessed 1 October 2025).
[5] Office for Budget Responsibility, The rise of public sector net debt over the past 25 years, July 2025, obr.uk/box/ the-rise-of-public-sector-net-debt-over-the-past-25-years/ (accessed 1 October 2025).
[6] Office for Budget Responsibility, Public finances databank – September 2025, 24 September 2025, obr.uk/download/public-finances-databank-september-2025/?tmstv=1761030212 (accessed 21 October 2025).
[7] Ibid.
[8] Office for Budget Responsibility, Fiscal risks and sustainability, 2025, p.5.
[9] Office for National Statistics, Government debt and deficit, 19 September 2025, www.ons.gov.uk/file?uri=/economy/governmentpublicsectorandtaxes/publicsectorfinance/datasets/governmentdeficitanddebtreturn/current/rftm17tables.xlsx (accessed 29 September 2025).
[10] Office for Budget Responsibility, The UK’s fiscal position in international context, July 2025, obr.uk/box/the-uks-fiscal-position-in-international-context/ (accessed 1 October 2025).
[11] Office for Budget Responsibility, Public finances databank – September 2025, 24 September 2025, obr.uk/download/public-finances-databank-september-2025/?tmstv=1761030212 (accessed 21 October 2025).
[12] Baum, A., et al., Debt and growth: new evidence for the euro area, ECB Working Paper No. 1450, 2012, p.1.
[13] Office for Budget Responsibility, The challenges of getting debt to fall as a share of GDP, March 2023, obr.uk/box/the-challenges-of-getting-debt-to-fall-as-a-share-of-gdp/ (accessed 1 October 2025).
[14] HM Treasury, Charter for Budget Responsibility: Autumn 2024, 2025, p.4.