Is the UK’s national debt set to match the size of the economy?

In a speech at Conservative party conference last week shadow chancellor Mel Stride MP claimed that under Labour “debt is set to rise every single year until it is the size of the entire economy”.

There are several different measures that are used when talking about public sector debt, and the picture over the coming years varies slightly depending on which you use.

It appears likely Mr Stride was referring to public sector net debt (often referred to as “national debt”). It is forecast to increase every year until 2029/30 in nominal and real terms—though as a percentage of GDP it is set to peak at 96.3% in 2028/29, then fall slightly.

Overall, debt is already high in historic terms, and the increases forecast over the next few years are relatively small compared to the very large rises seen over the last couple of decades.

The figures used in this fact check are based on the latest data published by the Office for Budget Responsibility, and are highly likely to change when the OBR releases its next forecast, shortly after chancellor Rachel Reeves delivers the Autumn Budget on 26 November.

How is debt measured?

There are a number of different ways to measure the UK’s debt:

• Public Sector Net Debt (PSND): Also sometimes referred to as overall debt or national debt, this refers to total government debt, net liquid assets.
  
• Public Sector Net Debt excluding Bank of England (PSND ex BoE): Also sometimes referred to as “underlying debt”, as the name suggests this is the same as PSND, but excludes the amount owed by the government to public sector banks, and the Bank of England’s debt.
  
• Public Sector Net Financial Liabilities (PSNFL): Compared to PSND this measure includes a wider range of the government’s financial assets and liabilities.

PSND is often described as the headline measure of debt. Between 1997 and 2022 the government used this measure to assess whether it was adhering to its commitment to reducing debt as a share of GDP, before switching to PSND ex BoE during Prime Minister Rishi Sunak’s administration.

PSNFL, meanwhile, is the measure of debt used by the current government to assess whether it is meeting its own fiscal rule on debt (which we’ve written more about here).

These measures can all be expressed in nominal (ie, cash) and real (ie, adjusted for inflation) terms, as well as as a percentage of GDP (which the Institute for Fiscal Studies has previously told us is the most important way to look at changes in debt.

What do the forecasts show?

We don’t know exactly what figures Mr Stride was referring to in his speech, or when he made a similar claim on X the following day—we’ve asked his office, and not had a response. But as he mentioned “national debt” it appears likely that he was talking about PSND, which is the measure of debt which shows it being closest to the size of the UK’s economy.

Whether he was referring to this measure or either of the other two main debt measures, Mr Stride was right to say that the actual amount of debt is forecast to increase in each year of the forecast period (which currently runs to 2029/30). All three measures show this is true in both nominal and real terms.

However, when it comes to measuring debt as a percentage of GDP, the different debt measures show slightly different things.

PSND is forecast to increase each year until 2028/29, before falling slightly in 2029/30.

PSND ex BoE, unlike PSND, is forecast to continue to increase as a percentage of GDP in 2029/30.

PSNFL—the government’s debt target measure— is forecast to peak as a percentage of GDP in the next financial year (2026/27) before falling in each subsequent year (because from that point the UK’s GDP is forecast to increase at a faster rate than PSNFL).

Mr Stride also claimed that debt is set to reach “the size of the entire economy”. As the graph above shows, PSND shows debt as being closest to the size of the UK’s economy and it is forecast to reach £3391.3 billion, or 96.1% of GDP, by 2029/30—so almost, but not quite as much as the UK’s GDP.

It’s also worth noting that debt is already high in historic terms. PSND is forecast to be 95.1% of GDP in the current financial year, a significant increase on previous decades, and is forecast to increase as a share of GDP by one percentage point over the forecast period.