In the financial year 2023/24, government revenue – from taxes and other receipts – was £1,095 billion (£1.1 trillion) while government spending was £1,216 billion (£1.2 trillion). The deficit was therefore £121 billion, equivalent to 4.4% of GDP.

Interest payments on government’s past borrowing are a relatively big cost for government. In 2023/24, government’s net debt interest spending was
£102 billion, which is equivalent to 3.8% of GDP or 8.4% of government spending.

Borrowing of £121 billion is equivalent to around £1,780 per head of the UK’s population.

The deficit reached a peacetime record in 2020/21 of 15% of GDP, largely for two reasons:

(1) Government provided support to public services, households and businesses during the pandemic, which cost around £229 billion;

(2) The virus and the lockdowns aimed at slowing its spread took the economy into a severe recession. Less economic activity meant smaller tax receipts and more government spending on areas such as unemployment benefits.

The budget deficit is financed by the sale of government bonds. These are essentially interest paying “IOUs” which the government sells to investors. Purchasers of government bonds include pension funds, insurance companies, households and overseas investors. The bonds make up most government debt. Once the bonds have been bought, they can be traded by investors on so-called secondary markets.

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.

https://commonslibrary.parliament.uk/research-briefings/sn06167/