Public finances: statistics terms explained

Debt, borrowing, fiscal rules, gilts and the language of forecasts and outturns used by HM Treasury, the ONS and the OBR.

Public sector net debt (PSND)

The public sector's financial liabilities, mainly government bonds, minus its liquid assets such as cash. The headline measure of the national debt.

Public sector net debt (PSND) is the ONS headline measure of what the UK public sector owes. It is gross debt (mainly gilts, Treasury bills and National Savings) minus liquid assets such as cash and foreign exchange reserves. The usual headline excludes public sector banks.

Worked example

Suppose hypothetical gross debt is £3,000 billion and liquid assets £300 billion. Net debt is £2,700 billion. If nominal GDP is £3,000 billion, debt is 90% of GDP.

Debt and borrowing are different

Debt is the accumulated stock. Borrowing is the yearly flow that adds to it. A fall in borrowing still adds to debt unless borrowing turns negative.

How it trips up claims

There are several debt measures, such as PSND excluding the Bank of England and public sector net financial liabilities. Fiscal rules may target a measure other than the headline.
Debt in pounds and debt as a share of GDP can move in opposite directions.
Figures are revised as tax and spending data arrive.

See the latest debt figure.

Also searched as: PSND, national debt, UK government debt, net debt meaning, PSND ex

Official definitions: ONS: Public sector finances, latest bulletin · ONS: PSND excluding public sector banks as % of GDP (HF6X) · ONS: Monthly statistics on the public sector finances, a methodological guide

Public sector net borrowing (PSNB)

The gap between what the public sector spends and what it receives in a period. Often called the deficit; it adds to debt.

Public sector net borrowing (PSNB) is the difference between total public sector spending and total receipts over a period, usually a month or a financial year. It is the headline measure of the deficit. Investment spending is included, so it differs from the current budget deficit, which excludes net investment.

Worked example

If hypothetical spending in a year is £1,200 billion and receipts are £1,100 billion, PSNB is £100 billion. If the next year spending is £1,250 billion and receipts £1,180 billion, borrowing falls to £70 billion, but debt still rises by roughly that amount.

How it trips up claims

"Cutting the deficit" is not the same as "paying down the debt".
Monthly PSNB is volatile because of when taxes are paid; compare the financial year to date with the same period a year earlier.
Early estimates are often revised by several billion pounds. ONS bulletins show the scale of recent revisions.
Check whether a figure compares with the OBR's forecast or with last year's outturn.

See the latest borrowing figure.

Also searched as: PSNB, budget deficit, government borrowing, deficit vs debt, current budget deficit

Official definitions: ONS: Public sector finances, latest bulletin · ONS: Public sector net borrowing excluding public sector banks (J5II) · ONS: Monthly statistics on the public sector finances, a methodological guide

Fiscal rules

Targets the government sets for itself on borrowing and debt, written into the Charter for Budget Responsibility and assessed by the Office for Budget Responsibility.

Fiscal rules are self-imposed targets for the public finances. In the UK they are set out in the Charter for Budget Responsibility, which HM Treasury lays before Parliament. The Office for Budget Responsibility (OBR) assesses in each Economic and Fiscal Outlook whether the government is on course to meet them.

What they typically cover

A rule on borrowing, such as balancing the current budget (day-to-day spending against receipts) by a target year.
A rule on debt, such as a measure of debt falling as a share of GDP by a target year.
Sometimes a cap on welfare spending.

The exact rules, measures and target years change when the Charter is updated, so always check the current Charter.

Worked example: "headroom"

If a hypothetical rule requires the current budget to balance in year five, and the OBR forecasts a surplus of £10 billion in that year, the government has £10 billion of headroom against the rule. A forecast change of that size can remove it.

How it trips up claims

Rules apply to forecasts for future years, so "meeting the rules" is about forecasts, not outturns.
Different governments have targeted different debt measures; compare like with like.

Also searched as: fiscal rules UK, fiscal headroom, Charter for Budget Responsibility, debt rule, stability rule

Official definitions: HM Treasury: Charter for Budget Responsibility · OBR: Economic and fiscal outlook

Gilts

Bonds issued by the UK government to borrow money. They pay a fixed interest (coupon) and repay the face value at maturity; index-linked gilts rise with RPI.

Gilts are UK government bonds. The UK Debt Management Office (DMO) issues them on behalf of HM Treasury to fund borrowing and refinance maturing debt. Conventional gilts pay a fixed coupon twice a year and return the face value at maturity. Index-linked gilts have their payments uprated in line with RPI.

Price and yield

Gilts are traded after issue, so their prices move. The yield is the return a buyer gets at the current price.

Worked example

A hypothetical gilt has a face value of £100 and pays £4 a year. If its market price falls to £80, a buyer still receives £4 a year, a yield of 5% on the price paid, plus the gain from receiving £100 at maturity. Falling prices mean rising yields, and the reverse.

How it trips up claims

A rise in gilt yields raises the cost of new borrowing but does not change the coupon on gilts already issued.
Debt interest costs respond quickly to inflation because of index-linked gilts.
Gilts held by the Bank of England through QE are still gilts in issue.

Also searched as: gilt yields, UK government bonds, index-linked gilts, what are gilts, gilt-edged securities

Official definitions: UK Debt Management Office: About gilts · UK Debt Management Office on GOV.UK · ONS: Public sector finances, latest bulletin

Outturn

The actual recorded figure for a period that has ended, as opposed to a plan, budget or forecast for it.

Outturn is the actual result for a period that has finished: what was really spent, raised or borrowed. Public finance documents distinguish outturn from plans (what was budgeted) and from forecasts (what was expected).

Worked example

A hypothetical department had a plan of £50 billion for a year. Mid-year the forecast was £52 billion. The outturn, published after the year ended, was £51.5 billion. Saying "spending is £52 billion" could refer to the forecast; the outturn is the figure that actually happened.

Where you will see it

HM Treasury's Public Expenditure Statistical Analyses (PESA) reports outturn spending by department and function.
ONS public sector finances report monthly outturn for borrowing and debt, which the OBR compares with its forecasts.

How it trips up claims

First outturn estimates are provisional and are revised as fuller accounts arrive.
"Planned" increases are not outturn; compare a pledge with outturn once the year is over.
Check whether a table shows cash or real terms.

See how to check a spending pledge.

Also searched as: outturn meaning, actual spending, outturn vs forecast, provisional outturn

Official definitions: HM Treasury: Public Expenditure Statistical Analyses (PESA) · ONS: Public sector finances, latest bulletin

Forecast and projection

A forecast is a best estimate of what will happen. A projection shows what would happen if stated assumptions hold, without claiming they will.

A forecast is a central estimate of what the producer expects to happen, based on judgement about likely developments. A projection shows what would happen if particular assumptions held, such as unchanged policy or past trends continuing, without predicting that they will.

Examples from official producers

The OBR publishes five-year economic and fiscal forecasts, based on government policy as announced.
The OBR also publishes long-term projections of the public finances, which show what would happen under stated assumptions over decades.
ONS national population projections show what would happen if assumed trends in births, deaths and migration continued. The ONS says they are not forecasts.

Worked example

A hypothetical population projection assumes net migration of 300,000 a year and shows 70 million people in ten years. If migration turns out to be 200,000 a year, the outcome will be lower. The projection was not "wrong"; its assumption was not met.

How it trips up claims

Forecasts come with uncertainty, often shown as fan charts or ranges. A central estimate is not a promise.
Compare a forecast with later outturn to see how it performed.

Also searched as: forecast vs projection, population projection, OBR forecast, economic forecast meaning

Official definitions: OBR: Economic and fiscal outlook · OBR: Fiscal risks and sustainability · ONS: National population projections, latest bulletin

Fiscal headroom

The margin by which the government is forecast to meet its main fiscal rule. It is a forecast, not money in a bank account, and it changes every time the OBR updates its numbers.

Fiscal headroom is the amount by which the government is forecast to meet its main fiscal rule in the target year. If the rule says the current budget must be in balance and the Office for Budget Responsibility forecasts a surplus of a few billion pounds in that year, that surplus is the headroom.

Why it matters when checking a claim

It is not a pot of cash. Headroom is the gap between two forecasts several years ahead. Saying the Chancellor "has £X billion to spend" treats a projection as if it were savings.
It moves with the forecast. Small changes to forecast interest rates, growth or inflation can add or remove billions, which is why headroom figures differ between fiscal events.
Check which rule. There can be more than one rule, each with its own margin. The OBR states the headroom against each one in its Economic and fiscal outlook.

The rules themselves are set out in the Charter for Budget Responsibility. For when the next figures will appear, see when is the next OBR forecast.

Also searched as: headroom, fiscal headroom meaning, what is fiscal headroom uk, headroom against the fiscal rules

Official definitions: Office for Budget Responsibility: Economic and fiscal outlook · HM Treasury: Charter for Budget Responsibility, Autumn 2025

Structural deficit

The part of government borrowing that would remain even if the economy were running at its normal capacity. Also called the cyclically adjusted deficit.

The structural deficit is the estimated level of borrowing that would remain if the economy were operating at its sustainable level, with no boom or slump. It strips out the cyclical part of the deficit: in a downturn, tax receipts fall and spending on benefits rises automatically, and these effects reverse when the economy recovers.

Why it matters when checking a claim

It is an estimate, not a count. The structural deficit depends on an estimate of the output gap, which cannot be observed directly. Different bodies can produce different figures for the same year.
It answers a different question from the headline deficit. Public sector net borrowing is what was actually borrowed. The structural figure suggests how much of that would persist without policy changes.
Look for the label. The OBR publishes cyclically adjusted borrowing in its forecasts and databank, and states the method it uses.

A claim that a deficit is "structural" or "temporary" should be checked against the OBR's published cyclically adjusted series.

Also searched as: cyclically adjusted deficit, structural deficit meaning, structural vs cyclical deficit, cyclically adjusted borrowing

Official definitions: Office for Budget Responsibility: Potential output and the output gap · Office for Budget Responsibility: Economic and fiscal outlook

Current budget

Government day-to-day receipts minus day-to-day spending, leaving out investment. A current budget surplus means taxes cover running costs.

The current budget compares the government's day-to-day income (mainly taxes) with its day-to-day spending, such as salaries, benefits, running costs and debt interest. It excludes net investment, such as building roads, hospitals or schools. A current budget deficit means the government is borrowing to pay for day-to-day costs; a surplus means it is not.

Why it matters when checking a claim

Different from total borrowing. Public sector net borrowing equals the current budget deficit plus net investment. A government can have a current surplus and still borrow overall to invest.
Used in the fiscal rules. The current budget has been the target measure in UK fiscal rules, so a claim about "balancing the books" may refer to this measure rather than to total borrowing.
Find it in the ONS bulletin. The ONS monthly public sector finances bulletin reports the current budget deficit alongside net borrowing, in cash terms and as a share of GDP.

Also searched as: current budget deficit, current budget balance, current budget surplus, day-to-day spending

Official definitions: ONS: Public sector finances, latest bulletin · HM Treasury: Charter for Budget Responsibility, Autumn 2025

Debt interest

What the government pays each year to service its debt, including interest on gilts and the uplift on index-linked gilts when inflation rises.

Debt interest is the cost of servicing government debt. It includes the interest (coupons) paid on gilts, interest on other borrowing such as National Savings, and, for index-linked gilts, the increase in the amount owed when the RPI rises.

Why it matters when checking a claim

Gross or net? The OBR reports central government debt interest net of the Bank of England's Asset Purchase Facility in some tables and gross in others. Check which version a figure uses.
Inflation drives it. Because a large share of UK gilts is index-linked, a spike in RPI inflation raises the debt interest bill quickly, even without new borrowing.
Compare like with like. A claim that the UK spends more on debt interest than on a public service should use the same year and basis for both, such as figures from PESA or the OBR.

For the latest figures, see how much does the UK spend on debt interest.

Also searched as: debt interest payments, interest on the national debt, debt servicing costs, debt interest uk

Official definitions: Office for Budget Responsibility: Tax by tax, spend by spend · ONS: Public sector finances, latest bulletin

Public sector net financial liabilities (PSNFL)

A wider measure of public sector debt that subtracts all financial assets, such as student loans and equity holdings, not just cash and reserves.

Public sector net financial liabilities (PSNFL) measures everything the public sector owes in financial form, minus all the financial assets it holds. It is wider than public sector net debt, which subtracts only liquid assets such as cash and foreign exchange reserves. PSNFL also nets off assets such as student loans, loans to businesses and shares the state owns.

Why it matters when checking a claim

Different debt measures give different answers. A statement that "debt is falling" can describe one measure and not another. Always ask which measure is meant.
It has been used in the fiscal rules. The UK's debt rule has been set against PSNFL as a share of GDP, so the headroom on that rule refers to this measure.
Published monthly. The ONS includes PSNFL in its public sector finances release, alongside PSND and other debt measures.

Also searched as: PSNFL, net financial liabilities, public sector net financial liabilities meaning

Official definitions: ONS: Public sector finances, latest bulletin · HM Treasury: Charter for Budget Responsibility, Autumn 2025

Spending review

The process in which HM Treasury sets government departments' budgets for several years ahead, usually covering day-to-day and capital spending.

A spending review is the HM Treasury process that sets each government department's budget for future years. It fixes departmental expenditure limits for day-to-day (resource) spending and investment (capital) spending, often for three or more years at a time. Budgets and other fiscal events then deal mainly with tax and with changes to the overall totals.

Why it matters when checking a claim

Multi-year totals can be counted in different ways. An "extra £X billion" may be the rise in one year, or the sum of rises over several years compared with a fixed baseline. The two can differ a lot.
Cash or real terms? Spending review documents give both. A settlement can rise in cash terms and fall in real terms.
Plans are not outturn. What a department actually spends is published later as outturn in PESA.

See how to check a government spending pledge.

Also searched as: spending review meaning, comprehensive spending review, what is a spending review uk, departmental budgets

Official definitions: HM Treasury: Spending Review 2025 · HM Treasury: Public Expenditure Statistical Analyses (PESA)

Departmental expenditure limits (DEL) and annually managed expenditure (AME)

The two halves of UK public spending: DEL is the budget each department is given, AME is spending such as pensions and benefits that depends on demand.

UK public spending is split into two control totals. Departmental expenditure limits (DEL) are the fixed budgets set for each department at a spending review, split into resource DEL (day-to-day) and capital DEL (investment). Annually managed expenditure (AME) covers spending that is harder to fix in advance because it depends on demand or economic conditions, such as the State Pension, most welfare benefits and debt interest.

Why it matters when checking a claim

Department budget or total spending? A claim about "health spending" may mean the Department of Health and Social Care's DEL, or a wider function-based total in PESA. These differ.
AME is forecast, not capped. Benefit spending can rise above plans without any decision to spend more, because more people qualify.
Totals are in PESA. HM Treasury's annual Public Expenditure Statistical Analyses breaks spending down by both DEL and AME.

Also searched as: DEL, AME, RDEL, CDEL, resource DEL, capital DEL, TME total managed expenditure

Official definitions: HM Treasury: Public Expenditure Statistical Analyses (PESA) · HM Treasury: Spending Review 2025

Tax burden

Total tax receipts as a share of GDP. Used to compare the overall level of tax over time or between countries, rather than the tax paid by any one household.

The tax burden is the total amount raised in taxes (and usually National Insurance contributions) expressed as a percentage of GDP. It is sometimes called the tax-to-GDP ratio. The OBR forecasts it at each fiscal event, and the ONS and HMRC publish the receipts it is based on.

Why it matters when checking a claim

Which definition? The OBR's main measure is national accounts taxes as a share of GDP. HMRC's receipts series covers only taxes HMRC collects. International bodies such as the OECD use their own harmonised definition.
A share, not a rate. The ratio can rise without any tax rate going up, for example through fiscal drag or because GDP grows more slowly than receipts.
"Highest since" claims depend on the series and the start date chosen. Check the OBR's historical databank.

See how UK taxes compare with other countries.

Also searched as: tax-to-GDP ratio, tax burden uk, tax as a share of GDP, overall tax burden

Official definitions: Office for Budget Responsibility: Economic and fiscal outlook · HMRC: Tax and NICs receipts for the UK

Fiscal drag

The rise in tax paid when tax thresholds are frozen or rise more slowly than incomes, pulling more income and more people into tax or into higher bands.

Fiscal drag happens when tax thresholds and allowances are frozen, or uprated by less than earnings or prices. As pay rises, more income falls above each threshold, so people pay more tax and some move into higher rate bands, without any change to the tax rates themselves.

Why it matters when checking a claim

"No tax rises" claims. A government can leave rates unchanged while raising revenue through frozen thresholds. Whether that counts as a tax rise is a matter of wording; the OBR publishes estimates of the revenue raised.
Counting people. Claims about how many more people pay higher-rate tax can be checked against HMRC's income tax statistics and OBR costings.
Cash versus real. A frozen threshold falls in real terms each year that prices rise.

For a fuller answer, see what is fiscal drag and how many people pay higher-rate tax.

Also searched as: frozen tax thresholds, bracket creep, stealth tax, fiscal drag meaning, fiscal drag uk

Official definitions: Office for Budget Responsibility: Economic and fiscal outlook · GOV.UK: Income Tax rates and Personal Allowances

Barnett formula

The mechanism HM Treasury uses to change the block grants for Scotland, Wales and Northern Ireland when spending on comparable services in England changes.

The Barnett formula sets how the block grants for the Scottish Government, the Welsh Government and the Northern Ireland Executive change when UK government spending on comparable services in England (or England and Wales) changes. Each devolved government receives a population share of the change, adjusted for how far the service is devolved. These changes are called Barnett consequentials.

Why it matters when checking a claim

It sets changes, not the whole grant. The formula applies to increases or decreases; the starting baseline reflects history. Higher spending per head in a devolved nation is not produced by the formula alone.
Not all funding goes through it. Devolved tax revenues, block grant adjustments and separate deals sit alongside it.
Money is not ring-fenced. A consequential from English health spending can be spent on anything devolved.

See how much Scotland gets from the Barnett formula.

Also searched as: Barnett consequentials, block grant, Barnett formula explained, Barnett formula Scotland

Official definitions: HM Treasury: Devolved administration funding and the Barnett formula · HM Treasury: Public Expenditure Statistical Analyses (PESA)