In 2026/27, total UK government expenditure is projected at approximately £1,375 billion. The five largest categories: social protection (£328bn), health (£272bn), debt interest (£124bn), education (£118bn), and defence (£60bn). For every £100 you pay in tax, approximately £24 goes to welfare, £20 to health, and £9 to debt interest alone.
Total Government Spending in 2026/27
The UK public sector's Total Managed Expenditure (TME) — the official measure of everything the government spends — is projected at approximately £1,375 billion for 2026/27 according to the Office for Budget Responsibility's Spring 2025 forecast. This represents approximately 44% of GDP, above the long-run average of 38–40% that prevailed for most of the 1990s and 2000s.
TME is split between Departmental Expenditure Limits (DEL) — planned day-to-day and capital spending by departments — and Annually Managed Expenditure (AME) — spending that moves with demand, including welfare benefits, state pensions, and debt interest. AME now accounts for approximately 55% of total spending and is largely outside direct government control in any given year.
Total government revenue (tax receipts plus other income) in 2026/27 is projected at approximately £1,287 billion. The gap — approximately £88 billion — represents the projected budget deficit, which must be funded by additional borrowing and adds to the national debt.
To put £1,375 billion in perspective: it is approximately £20,100 for every man, woman, and child in the UK. It is larger than the entire GDP of Spain. It is approximately 35 times the annual NHS England budget of 2000.
The Top 10 Spending Categories
Government spending is published in the Public Expenditure Statistical Analyses (PESA) using the Classification of the Functions of Government (COFOG) categories. The major categories for 2026/27, based on OBR projections and 2024/25 outturn data, break down as follows:
| Category | £ billion (2026/27) | % of Total | £/household/month |
|---|---|---|---|
| Social Protection (welfare, state pension) | £328bn | 23.9% | £1,004/mo |
| Health (DHSC, NHS England) | £272bn | 19.8% | £832/mo |
| Debt Interest | £124bn | 9.0% | £379/mo |
| Education | £118bn | 8.6% | £361/mo |
| Transport | £71bn | 5.2% | £217/mo |
| Defence | £60bn | 4.4% | £184/mo |
| Housing & Environment | £52bn | 3.8% | £159/mo |
| Law & Order (police, courts, prisons) | £48bn | 3.5% | £147/mo |
| Other Economic Affairs | £45bn | 3.3% | £138/mo |
| General Government Services | £42bn | 3.1% | £128/mo |
Per-household figures based on approximately 28 million UK households. Data: OBR Economic and Fiscal Outlook March 2025, HM Treasury. Figures rounded, indicative only.
Debt Interest: The Cost That Crowds Out Everything Else
Debt interest — projected at £124 billion in 2026/27 — is the fastest-growing category of government expenditure and the one least visible to taxpayers. It represents money spent purely on maintaining the existing debt stock, with zero service provided in return. No hospital bed is funded, no teacher employed, no road built. It is the cost of having borrowed more than was collected in previous years.
At £124 billion, debt interest now costs more than education. It exceeds the entire budget for defence, law and order, and transport combined. The OBR projects debt interest will remain elevated — above £100 billion per year — for the rest of the decade, constrained from rising further only because interest rates are expected to gradually decline from their post-2022 peaks.
The UK's debt interest bill is particularly sensitive to inflation because approximately 25% of outstanding gilts are index-linked — their coupon payments rise with RPI. When RPI peaked at over 14% in October 2022, the cost of servicing index-linked debt spiked dramatically, contributing to a record £120 billion interest bill in 2022/23. The inflationary period of 2021–2023 cost the Treasury tens of billions of extra interest that was not budgeted for.
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How UK Spending Compares to the OECD
At approximately 44% of GDP, UK public spending sits in the upper-middle range of OECD members. France spends approximately 57% of GDP through the public sector — but this includes social insurance contributions that function more like mandatory savings. Germany spends approximately 48% of GDP. The United States spends approximately 37% — though this excludes the much larger direct role of private insurance in healthcare funding.
The OECD average is approximately 43% of GDP. The UK's position has shifted significantly since 2000 when public spending was around 36–37% of GDP. The increase reflects primarily higher health costs, welfare commitments, and rising debt interest — not discretionary increases in public service quality.
UK health spending as a percentage of GDP (approximately 10–11%) is broadly comparable to France and Germany but delivers measurably worse outcomes on several indicators including cancer survival rates, diagnostic waiting times, and infant mortality, according to Commonwealth Fund and OECD Health Statistics data. This efficiency gap — roughly the same percentage spent but different outcomes — is one of the central debates in UK public finance.
Where Spending Has Grown Fastest
In real terms (adjusted for inflation), the areas of government spending that have grown fastest since 2010 are: debt interest (up from approximately £48 billion to £124 billion in nominal terms), health (up from approximately £140 billion to £272 billion nominal), and social protection (up from approximately £220 billion to £328 billion nominal).
The areas that have seen real-terms reductions since 2010 include: local government (reduced real-terms funding requiring significant council tax increases to compensate), justice (courts, prisons, legal aid all substantially reduced in real terms), and some elements of transport infrastructure.
Health spending's growth reflects both demographic pressure (an ageing population requiring more care), wage costs (NHS staff are the single largest element of the health budget), and the structural costs of the post-pandemic treatment backlog. The waiting list of 7.5 million people in 2024 represents a deferred demand that will cost significantly to clear.
What a 10% Cut to Each Department Would Save
The scale of UK public spending means that even large percentage cuts to individual departments save modest amounts relative to the total. A 10% real-terms cut to the education budget would save approximately £11.8 billion per year — equivalent to less than 10 weeks' worth of debt interest. A 10% cut to the defence budget saves £6 billion — roughly five weeks of debt interest. Only cuts to the very largest categories (social protection and health) move the needle materially on the fiscal position.
This arithmetic explains why fiscal consolidation is difficult in practice. The three categories that dominate spending — social protection, health, and debt interest — are each driven by structural forces (demographic ageing, debt stock, inflation) that are not easily reversed by policy decisions in a single parliament. Meaningful deficit reduction requires either sustained revenue growth, structural reform of health and welfare spending, or sustained economic growth that raises tax receipts without rate increases.