UK Debt Interest Calculator

If the 10-year gilt yield rises to 5.37%, the government would pay £19bn more in debt interest in 2030/31.

To cover that, public services would have £19bn less to spend: a 3% cut to their day-to-day budgets.

10-year gilt yield

+0.97pp vs OBR forecast

5.37%
OBR forecast 4.40%
Today 5.37%

Today as of 1 Oct 2026 · Source: Bank of England

Public services vs the economy

  • The economy (real GDP)
  • Public services, your scenario
  • Public services, as planned
Year-on-year growth after inflation. Public services = day-to-day departmental spending (RDEL).
Show as table
YearThe economy (real GDP)Public services, your scenarioPublic services, as planned
2026/271.3%1.2%2.8%
2027/281.6%0.5%0.9%
2028/291.6%0.9%1.3%
2029/301.5%−0.2%0.2%
2030/311.5%1.0%1.3%

Where the extra interest comes from

  • Short-term debt & QE
  • New & refinanced gilts
  • Inflation-linked gilts
  • Interest on interest
Extra debt interest each year compared with the OBR forecast, £bn.
Show as table
YearShort-term debt & QENew & refinanced giltsInflation-linked giltsInterest on interest
2026/27£7.0bn£1.1bn£0.1bn£0.0bn
2027/28£6.6bn£3.5bn£0.4bn£0.4bn
2028/29£6.1bn£5.9bn£0.7bn£1.0bn
2029/30£5.6bn£8.0bn£0.9bn£1.8bn
2030/31£5.0bn£9.8bn£1.2bn£2.6bn

To put that in context

Share of the economy

+0.51% of GDP

Extra debt interest in 2030/31

Per household

+£643 a year

Extra debt interest in 2030/31, per UK household

Compared with a government department

About the size of the entire Welsh Government budget

Using current departmental budgets

Debt interest from every £1 of tax

9p → 10p

Forecast vs your scenario, 2030/31

How this works

›What the slider changes

The slider sets the 10-year gilt yield, the interest rate the government pays to borrow for ten years. The starting point is the yield the OBR assumed in its OBR's March 2026 forecast forecast (4.40%, based on market prices up to 30 Jan 2026). Moving the slider shifts the interest rate on all government bonds up or down by the same amount, immediately and permanently.

With “Bank Rate moves too” ticked, Bank Rate shifts by the same amount. That raises the cost of short-term borrowing and of the money the Bank of England created through quantitative easing, on which it pays Bank Rate.

›Why the extra cost builds up gradually

Most government debt has a fixed interest rate until it's repaid. A rise in yields only affects new borrowing and old debt being refinanced as it matures. So the extra cost starts small and grows each year. Debt linked to Bank Rate is the exception, because it reprices straight away.

The extra interest is the sum of four parts:

  • New and refinanced conventional gilts, issued at the new rate
  • New inflation-linked gilts, assuming their real rate moves by the same amount
  • Short-term debt and quantitative easing, if Bank Rate moves
  • Interest on the extra borrowing needed to pay all of the above
›Why it comes out of public services

The calculation assumes the government keeps to its tax and borrowing plans, so every extra pound of interest has to be found from day-to-day spending on departments (resource DEL). In reality a Chancellor might raise taxes or borrow more instead. Welfare and capital investment are left unchanged.

Growth rates are after inflation (using the GDP deflator) and averaged from 2026/27 to 2030/31.

›How it compares with the OBR

The OBR publishes a rule of thumb for how sensitive debt interest is to interest rates. For a 1 percentage point rise, by 2030/31:

This modelOBR
Gilt yields only£11bn£10bn
Gilt yields and Bank Rate£16bn£15bn

The OBR counts the cost of the extra borrowing separately, so it's left out of this comparison. In this model it adds a further £2.7bn by 2030/31 when gilts and Bank Rate both rise by 1 point.

›What this doesn't capture
  • Knock-on effects of higher rates on growth, inflation or tax receipts
  • Changes to the shape of the yield curve (short and long rates moving differently)
  • Policy responses such as changing the mix of debt the government issues
  • Anything beyond the OBR's five-year forecast

This is an illustrative model, not a forecast or financial advice.

›Sources