How does the government borrow £400 billion? | Institute for Fiscal Studies (2024)

FAQs

How does the government borrow money from? ›

The federal government borrows money from the public by issuing securities—bills, notes, and bonds—through the Treasury.

A large debt may discourage expansion of economic activity because of the fear of high taxes in the future and the realization that the large debt may prevent borrowing for urgently needed local improvements. When governments borrow they must meet interest obligations, and these are usually paid out of taxes.

Government borrowing

Government borrowed £121 billion in 2023/24, according to the ONS's second provisional estimate, which is equivalent to 4.5% of GDP. Borrowing is around £6.4 billion lower than in 2022/23, but £7.3 billon higher than the OBR forecast in March 2024.

Debt is the total amount owed by the Government which has accumulated over the years. Debt is therefore a much larger sum of money. At the end of 2023/24 public sector net debt was £2,690 billion (i.e. £2.6 trillion), or 98% of GDP. This is equivalent to around £37,900 per person in the UK.

Nearly half of all US foreign-owned debt comes from five countries. All values are adjusted to 2023 dollars. As of January 2023, the five countries owning the most US debt are Japan ($1.1 trillion), China ($859 billion), the United Kingdom ($668 billion), Belgium ($331 billion), and Luxembourg ($318 billion).

The largest holder of U.S. debt is the U.S government. Which agencies own the most Treasury notes, bills, and bonds? Social Security, by a long shot. The U.S. Treasury publishes this information in its monthly Treasury statement.

In 2023, aggregate local government debt had risen to 92 trillion yuan ($12.58 trillion) and the central government of People's Republic of China ordered its banks to roll over debts in a debt-restructuring. China's gross external debt in 2023 was $2.38 trillion.

The $34 trillion gross federal debt equals debt held by the public plus debt held by federal trust funds and other government accounts. In very basic terms, this can be thought of as debt that the government owes to others plus debt that it owes to itself. Learn more about different ways to measure our national debt.

How much does the UK owe the US? Nothing. As previously stated the UK's war debt to the US was finally paid off in 2006, every last dollar.

How in debt is Russia? ›

According to the Bank of Russia's estimate, external debt of the Russian Federation as of March 31, 2024 totaled $304.0 billion, having decreased by $12.8 billion, or by 4.1%, since the end of 2023.

During the Lost Decades, Japanese public debt has continued to rise in response to a number of challenges, such as the Great Recession in 2008, and as well as two national crises, including the triple disaster (earthquake, tsunami, and nuclear disaster, etc.)

The national debt is the sum of a nation's annual budget deficits, offset by any surpluses. A deficit occurs when the government spends more than it raises in revenue. The government borrows money by selling debt obligations to investors to finance its budget deficit.

So where does the Fed get its money? Unlike other government agencies, the Federal Reserve doesn't get its money from Congress as part of the usual budget process. Instead, Federal Reserve funding comes mainly through interest on government securities that it bought on the open market.

The federal government collects revenue from a variety of sources, including individual income taxes, payroll taxes, corporate income taxes, and excise taxes. It also collects revenue from services like admission to national parks and customs duties.

Who owns this debt? The public owes 74 percent of the current federal debt. Intragovernmental debt accounts for 26 percent or $5.9 trillion. The public includes foreign investors and foreign governments.