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Fiscal Policy - The Government Debt Service Burden

Level:
A Level, IB
Board:
AQA, Edexcel, OCR, IB, Eduqas, WJEC

Last updated 20 Nov 2021

In this video we will look at the debt service burden for the UK government.

Fiscal Policy - The Government Debt Service Burden

UK Chancellor Sunak faces difficult fiscal policy choices as the UK economy recovers from the impact of the pandemic

The budget deficit soared in 2020 and so too did the national debt

And, as a result, the amount that the government is paying in interest to holders of government bonds is climbing rapidly

This is known as the debt service burden.

Interest payments on UK government debt were £5.6 billion in October 2021, £3.8 billion more than in October 2020.

Debt burden is the cost of servicing debt – in other words, the interest payments made each year on existing debts.

For the UK government, this is the interest paid on the National Debt.

The national debt is the government's stock of outstanding debt.

UK public (government) sector debt was £2.3 trillion at the end of October 2021 - or around 95 per cent of the UK’s gross domestic product.

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