Budget simulator
You are Chancellor. Your challenge: balance the budget (get borrowing down to zero) by changing spending and tax. Watch the effect on debt over 10 years.
This challenge is stricter than the government's own rules, which allow borrowing to invest.
Source: HM Treasury, Charter for Budget Responsibility: Autumn 2025, paragraphs 3.2 and 3.6. Figure dated . Retrieved . official
This is a teaching model, not a forecast
A simplified educational model. It applies static, first-round effects only and does not model how the economy responds to changes. It is not a forecast and must not be read as one.
Move the sliders to balance the budget.
Result
- Total spending
- …
- Total revenue
- …
- Borrowing this year
- …
Debt over 10 years
| Year | Debt (£ bn) | Debt (% of GDP) |
|---|
Assumptions used in this model
- The starting point is financial year 2025-26. Spending is £1,360 bn, from HM Treasury, PESA 2026, Table 1.1, total managed expenditure, 2025-26 outturn. It includes roughly £110 bn of debt interest (the OBR's central government figure). Borrowing is £134 bn, from ONS, Public sector finances, UK: September 2026. Revenue, £1,226 bn, is spending minus borrowing.
- Debt starts at £3,005 bn, from ONS, Public sector finances, UK: September 2026, for .
- Each percentage point on a rate is worth roughly the amount shown (an HMRC 'ready reckoner' style estimate). Income tax shows the basic rate as a simple stand-in for the whole system.
- Spending includes this year's debt interest. In later years interest is the assumed rate times the debt, so a bigger debt costs more to service. Debt is held at zero once cleared. The economy grows at the assumed cash rate, so debt as a share of GDP can fall while the debt itself rises. Behavioural responses are not modelled.
- Interest rate: An assumption for this model, not a published rate. Neither the OBR nor the House of Commons Library publishes a single effective interest rate on the UK debt stock; the Library briefing of 12 August 2026 describes the effective rate only as a trend. So it is set to 3.7%, the rate implied by figures the site already carries: OBR debt interest of £110bn (March 2026 forecast) over ONS net debt of £3,005bn (end September 2026). That check follows the OBR's illustrative method in The outlook for debt interest spending (25 August 2017), and the OBR calls the method illustrative for good reason: the perimeters differ, because the interest figure is central government interest net of APF while net debt is public sector net debt excluding banks. The rate is an average across the whole stock and sits well below the market rate on new borrowing, which the Commons Library put at 5.05% for 10-year and 5.7% for 30-year gilts in mid-August 2026. Part of the stock is effectively financed at Bank Rate, 3.75% at that date, which is one reason the average is nearer 4% than 5%. Revisit at each OBR forecast, not on market moves.
- Growth: An assumption for this model. The OBR forecast has nominal GDP growth falling from just under 4.5% in 2025-26 to an average of 3.5% over the rest of the forecast; the model uses that 3.5% for every year. Nominal means in cash terms, so it includes inflation. It is the denominator for debt as a share of GDP and does not respond to the choices made in the simulator. Revisit at each OBR forecast.
Source: Modelling assumption for this tool, checked against OBR debt interest and ONS net debt. Figure dated . Retrieved . estimated
Source: OBR, Economic and Fiscal Outlook March 2026, paragraph 2.40 (nominal GDP growth). Figure dated . Retrieved . estimated