Fuel and travel costs are pushing prices up again
Thursday 5 November 2026
Inflation has risen to 3.1%, meaning everyday spending is getting more expensive just as household budgets are already under pressure.
What it means
When the government borrows, including by selling bonds, it has to meet the costs agreed with lenders. Debt interest is the cost charged for borrowing, separate from repaying the amount borrowed. The reported UK total can also change when inflation rises because payments on some bonds are linked to a price measure. A higher debt stock or higher borrowing costs can increase debt-interest spending, although not every existing loan changes rate at once.
Example
On a simple made-up loan of £1,000 at 5% annual interest, the interest for one year is £50. Paying that £50 alone would not pay back the £1,000 borrowed. Actual public debt includes different kinds of borrowing.
Why it matters
Interest uses public money that could otherwise support spending or tax changes, and its cost can move even when the amount borrowed changes little.
Also known as
public debt interest
Related terms
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Budget deficit
The gap when the government and wider public sector spend more than they receive over a period.
Read more -
Government bond yield
The return a buyer expects from a government bond at its current price, usually shown as a yearly percentage.
Read more -
Primary deficit
The gap when public spending, excluding debt interest, is greater than public income.
Read more -
Public sector net debt
A UK measure of the public sector's outstanding debts after subtracting certain assets it can quickly turn into cash.
Read more
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