Britain's annual debt interest bill is forecast to reach nearly £101 billion in 2026-27, a figure the Institute of Economic Affairs (IEA) says is equivalent to the total income tax paid by 17.8 million full-time workers earning the average wage of £40,911 a year.
The forecast marks a 158% increase from the £39 billion recorded a decade ago, according to the new analysis.
Burden expected to grow further
The IEA warns the burden on taxpayers will become even heavier in the coming years. Annual debt interest payments are expected to reach £120.3 billion in 2029-30, requiring the equivalent of the annual income tax bills of 21.2 million workers.
Valentin Boboc, chief economist at the IEA, said: "Britain needs the equivalent of another 3.4 million taxpayers just to cover the soaring cost of servicing our national debt over the next three years. The scale of the problem is staggering."
He added: "The equivalent of the entire annual income tax bills of almost 18 million workers is now being swallowed up by debt interest alone, before a single penny is spent on schools, hospitals or policing. This is the price of years of excessive borrowing and spending."
Political reaction and Treasury response
Richard Fuller, Shadow Chief Secretary to the Treasury, said: "This is an astonishing indictment of Labour's economic failure. The tax of millions is being swallowed up by the interest on our national debt."
He continued: "Working people are being squeezed as the bill keeps growing. Britain cannot tax its way out of a debt crisis, which is why the Conservatives' 'golden economic rule' would put half of every pound saved from spending cuts towards bringing down the deficit."
A Treasury spokesperson said: "The Chancellor is committed to the fiscal rules and getting debt and borrowing down so that we spend less on debt interest, and more on people's priorities. Borrowing has fallen to its lowest level in six years; the OBR has confirmed it continues to fall over the forecast, and the IMF has backed our plan to get the deficit down."
Every pound spent on servicing debt cannot be used to ease the tax burden or fund public services, the IEA analysis notes, with the burden expected to intensify through the forecast period.
