UK national debt breaks £3trillion barrier for first time as borrowing crisis deepens

Total public sector borrowings reached £3.005trillion in September, the ONS confirmed. The sum amounts to more than £100,000 for every household in the country and stands at 94 per cent of GDP.

The record has been reached after a rapid acceleration in government debt, which only passed the £2trillion mark in June 2020.

Today’s data release is the final snapshot of the public finances before Mr Healey sets out his tax and spending plans next week.

Surging borrowing costs driven by the war in Iran were the primary cause of the debt climbing far faster than anticipated. The energy shock unleashed by the conflict also sent inflation sharply higher, rising from 3.1 per cent in August to 3.5 per cent in September, its highest reading of the year.

Fuel prices were a major factor behind the jump. The ONS reported that the average cost of petrol climbed by 8.2p between August and September to levels not seen since August 2022. Diesel prices surged by 10.7p to their highest point since July 2022.

The September inflation figure exceeded the 3.4 per cent that analysts had predicted.

To cover the shortfall between tax revenues and government expenditure, Mr Healey borrowed £24.5billion during the month alone.

The fiscal strain on Mr Healey is intensifying. Borrowing across the first six months of the financial year reached £97.8billion, overshooting the Office for Budget Responsibility’s forecast by £6billion.

The cost of servicing Britain’s debt has also ballooned. In September alone, the government spent £10.9billion on debt interest payments, the highest figure for that month since records began in 1997.

That was £1.6billion more than in September 2025 and £2billion above what the OBR had projected. It marked only the eighth time the country’s monthly interest bill has topped £10billion.

A combination of elevated borrowing and rising bond yields has driven the increase. Despite having pledged to make “fiscal discipline” his top priority, Mr Healey is expected to avoid confronting Britain’s growing welfare bill, which already costs £333billion a year.

Andrew Griffith, the shadow chancellor, seized on the figures as proof that “Labour has lost control of the economy”.

Mr Griffith demanded that next week’s Budget deliver “urgent action to tackle the deficit, and reduce the red tape and net zero costs that are driving up the cost of living for families.”

He also pledged to slash the welfare bill to “make our country prosperous again” should the Conservatives return to power.

The Prime Minister has acknowledged that “difficult decisions” lie ahead in the Budget. However, rather than cutting benefits, Mr Healey is reportedly planning tax rises to fund a cost-of-living support package for households under financial strain.

Ruth Gregory, deputy chief economist at Capital Economics, said the figures painted “a dismal picture” of the nation’s finances.

Darwin Friend, a research director at the TaxPayers’ Alliance, described the breach of the £3trillion threshold as “a damning indictment of decades of fiscal failure”.

Mr Friend added: “With debt interest soaring and borrowing overshooting forecasts yet again, taxpayers are paying a terrifying price for Whitehall’s addiction to spending.”

He urged the Chancellor to use his first Budget to rein in welfare spending rather than increasing taxes.

Richard Carter of Quilter Cheviot cautioned that the numbers highlighted “the difficult circle the Government is attempting to square” as it pursues long-term spending commitments amid elevated borrowing costs.

Grant Fitzner, the ONS’s chief economist, noted that while debt in cash terms continued to grow, it had fallen as a proportion of GDP over the past year, remaining at levels last recorded in the early 1960s.