A frequently asked question is – Who does the UK borrow from? Who owns the UK’s government debt?
Basically, government debt is bought by the private sector. This includes both domestic investors like pension funds, banks and households, and also overseas investors. Between 2009, and 2022, a substantial part was also bought by the Bank of England under quantitative easing.
(Asset Purchase Facility = Bank of England)
In 2023, UK government debt is primarily held by:
- 39% Private financial institutions – banks, pension funds, investment trusts and also private households.
- 30% is held by overseas investors (e.g. American investment trusts/Japanese banks)
- 30% is held by Bank of England – as part of Quantitative easing/asset purchase programme.
In 2023, who owns debt
In 2017, the private sector held a slightly higher share
This shows the three main sectors
- Overseas buyers
- Bank of England
- Private sector
The private sector can be split up into
- Pension funds /insurance companies – bonds seen as safe investment with a guaranteed return
- Investment trusts
- Households. You could go and buy your own government bonds
- Commercial Banks. Buying gilts (short-term bonds seen as safe liquid form of asset.
Trends in the Ownership of UK Debt
Since the 1980s
- Since 1987, the share held by UK pension funds has fallen from 60% to 20%.
- From 2009-2022 the Bank of England has purchased gilts. However, since 2022, it has started to reverse the process of quantitative easing, holding fewer bonds.
- Overseas holdings have increased since the 1980s and are now around 30%.
Future Trends in Gilt Holdings
The OBR expect the share of gilts held by pension funds to fall. As they move from defined payouts to contribution based payouts, pension funds no longer need the security of bonds. Therefore, it is expected they will buy fewer gilts and bonds.
It means the UK will increasingly rely on overseas buyers of bonds. This could be a factor in pushing up bond yields.
Notes about government debt
- The government needs to borrow because it spends more than it receives in tax revenue.
- To finance this shortfall the government sell bonds, gilts, and treasury bills.
- In the UK government debt is managed by the DMO Debt Management Office
- Government debt is the accumulation of past borrowing. The government’s budget deficit adds to its total debt. It borrows by selling ‘gilts’ and bonds. In return purchasers of bonds get paid an interest from government.
- Government debt is different from the external debt of a country (the total owed by private and government sector to foreign debtors)
- It is also different to the balance of trade (concerned with the level of UK imports and exports)
Why do people buy bonds/gilts? (effectively lending government money)
This is all the interest payment that people who buy bonds effectively lend the government get.- Government bonds are seen as a safe investment. The UK has not defaulted on debt in the past. It is a safer investment than shares – which can go down in value.
- Rate of interest. Buyers of bonds get an interest on the bond. Some bonds are ‘index-linked’ which means the rate of interest varies with inflation. If investors are nervous about inflation reducing the value of gilts, they can buy these index-linked bonds
- In a recession, demand for government bonds tends to be higher because of banks, companies are more nervous about lending and investing. Government bonds are a safe investment for turbulent times.
- Pension funds need to invest contributions for future payouts. Government bonds provide a secure part of the portfolio.
- Companies like Apple may have a large surplus of profit and high levels of savings. Bonds are a way to invest this money.
- Households can buy bonds as a way to save and get a guaranteed bond yield (often higher than bank rates.
This is the cost of selling new bonds/gilts. Bond yields rise to attract enough people to buy the bonds.
Sectoral Balances
This helps to show how government debt affects other sectors of the economy. In basic accounting terms. The sum of three main sectors
Government, private sector and rest of world must = 0
What this means – If the government runs a deficit (i.e. net borrowing), then the non-government sector (private domestic + foreign) must have a surplus (net lending). So if the government runs a deficit, it accumulates debt. The private sector + rest of world will be running a surplus. (e.g. buying bonds from the government)
See more at: Sectoral Balances
UK Public sector net debt was 1,785.3 billion at the end of September 2017, equivalent to 87.2% of GDP
Holdings of gilts by sector
Graph Showing UK Debt Held By Overseas Investors
Who owns US National Debt?
As of Nov 2025 US debt was $38 trillion (Nov 2025) 118% of GDP
Total foreign debt holdings were around $9.16 trillion in U.S. Treasury securities, which is about 25% of the total U.S
Overseas Holdings of Debt
| UK | 25–30% |
| US | 32–33% |
| Canada | 29% |
| Japan | 8% |
| Germany | 60% |
| France | 60–65% |
| Italy | 30–35% |
Note For Euro countries like Germany overseas include other Euro investors, so it is not so comparable.
Related
External links
- PSF Finance stats at HM Treasury
- More data source: UK DMO
About The Author
Something still puzzles – current net spending is ~£50bnannually. So UK government is spending ~£1bn more than earned each month. Total government debt is (per above) around £1.3tn – so £1,300bn.
If UK finances somehow can be made to generate £1bn surplus per month, that implies it will take over 100 years to repay.
On what basis is UK still a safe haven to invest?
I’d suggest that the last thing those with wealth want is for debts to be paid. Then they’d loose the capacity to extract wealth from economies via rent with excess wealth.
The UK has only finished paying off WW1 debt, which was far higher in GDP terms than today’s debt. 80% was held domestically- so those families have done very well, and are probably glad to have a financial crash leading to new borrowing to open a new fiedl for extraction.
The fact that the UK govt still paid off WW1 debt king nearly 100 years shows why it’s so attractive.
As of June 2026, the UK holds approximately $939.90 billion in US Treasuries. This amount reflects the total value of US Treasury securities held by UK entities, including government agencies and financial institutions . Why can’t UK use this asset to reduce our own liability?