22OCT

IMF ranks UK sixth of G7 on gross debt

3 min read

16:23UTC

The IMF put UK gross debt at 102.0% of GDP for 2026 in its October World Economic Outlook, sixth of the G7, and sees it peaking at 102.5% in 2027.

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EconomicAssessed

Key takeaway

The IMF puts UK gross debt at 102.0% of GDP, sixth of seven in the G7.

The International Monetary Fund (IMF) put UK general government gross debt at 102.0% of gross domestic product (GDP) for 2026 in its October World Economic Outlook, published on 13 October⁠¹. On the same October figures the G7 reads: Japan 199.4%, Italy 137.9%, the United States 126.8%, France 118.5%, Canada 115.6%, the UK 102.0% and Germany 64.6%.

Gross debt is the IMF's standard cross-country measure; unlike the net debt published by the Office for National Statistics (ONS), it does not subtract the cash and other liquid assets the state holds. The IMF's 102.0% and the ONS's 94.0% are different series, and neither corrects the other.

The IMF trimmed the UK's 2025 figure to 102.1%, from the 102.3% in its April edition. It sees UK gross debt peaking at 102.5% in 2027 and easing to 100.2% by 2031, while the American, French and German ratios climb. The UK deficit falls from 3.8% of GDP in 2026 to 1.4% in 2031, the smallest in the G7 that year; the United States is at 8.4%⁠². The IMF also forecasts UK growth of 1.3% in 2026 and 1.2% in 2027, ResultSense reported on 14 October⁠³.

Labour's Torsten Bell wrote on 14 October that the IMF figures show the fastest fiscal consolidation in the G7⁠⁴, a government-side reading of the same chart. Closing about 2.4 points of GDP in five years is also a large squeeze on taxes and spending, which is the Budget question in another form.

Deep Analysis

In plain English

The International Monetary Fund (IMF) is a global body that lends to countries in trouble and tracks their finances. Twice a year it publishes forecasts for every major economy. Its latest tables put Britain's debt at 102% of the size of its economy. Among the G7, the seven largest rich democracies, only Germany owes less as a share of its economy. This figure is higher than the 94% quoted by the Office for National Statistics. That is because the IMF counts all debt, while the British figure subtracts the cash the government holds. Both are correct; they measure different things.

Deep Analysis

Root Causes

Gross debt counts everything the state owes, while net measures subtract liquid assets such as cash and reserves. The IMF's own tables put UK net debt at 93.4% of GDP, 8.6 points below its gross figure, because the state holds sizeable liquid assets.

The IMF's forecast deficit fall rests on policy already set: frozen tax thresholds that raise revenue as wages rise, and spending plans that grow more slowly than the economy.

What could happen next?

Meaning
By the IMF's measure Britain's debt is mid-table for the G7 and set to stabilise while others rise.
Risk
The projected debt peak depends on a deficit squeeze of about 2.4 points of GDP that has yet to be legislated.

Source Landscape

This story draws on neutral-leaning sources

Primary parallel: Canada cut its deficit sharply from 1995 under finance minister Paul Martin, mostly through spending cuts, and its debt ratio fell steadily for more than a decade. A G7 country with high debt reversed the trend through a planned squeeze that was actually delivered.

Counter-parallel: Japan has carried gross debt above 200% of GDP for years without a funding crisis, because most of it is held at home and by the Bank of Japan. Its 199.4% in the October tables shows that the ranking of debt levels says little on its own about who can still borrow.

Immediate: the IMF trimmed the UK's 2025 gross debt figure to 102.1% from 102.3% in April. It forecasts UK growth of 1.3% in 2026 and 1.2% in 2027, on ResultSense's report.

Structural: the United States deficit of 8.4% of GDP in 2031 against the UK's 1.4% matters for global bond supply. Heavy American borrowing pushes up yields worldwide, which raises UK borrowing costs even if British policy stays on track.

Consensus view: Labour's Torsten Bell wrote on 14 October that the IMF figures show the fastest fiscal consolidation in the G7, with the UK deficit falling from 3.8% of GDP in 2026 to 1.4% in 2031. The IMF projects UK gross debt easing to 100.2% by 2031 while the American, French and German ratios climb.

Counter-view: Conservative leader Kemi Badenoch said in September that Labour "will run out of money", and the IMF projection itself depends on that consolidation being delivered. A forecast squeeze of about 2.4 points of GDP has to come from tax rises or spending restraint that have not yet been announced in full.

Key tension: Whether markets give Britain credit for a planned consolidation, or price the risk that it slips as earlier ones did.

Sources:International Monetary Fund·Torsten Bell·ResultSense

Mentions:International Monetary Fund →World Economic Outlook →United Kingdom →Torsten Bell →G7 →Labour Party →Japan →Italy →United States →France →Canada →Germany →ResultSense →Paul Martin →Kemi Badenoch →Office for National Statistics →

First Reported In

Update #5 · Debt passes £3trn, its ratio below forecast

International Monetary Fund· 22 Oct 2026

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Different Perspectives

Pension Protection Fund

Acting chief actuary Aaron Pang put the rise to 135.0% funded down to liabilities falling 2.1% against a 1.0% fall in assets, reflecting higher gilt yields. On Lowdown's reading, the yields that lift the Treasury's interest bill leave 4,838 company schemes with a £280.7bn surplus that does not reduce state borrowing.

Torsten Bell

The Labour figure wrote on 14 October that the IMF's October figures show the fastest fiscal consolidation in the G7. The IMF forecasts the UK deficit falling from 3.8% of GDP in 2026 to 1.4% in 2031, a squeeze still to be delivered through taxes and spending.

Tax Justice UK

The left-leaning campaign group says ten tax reforms would raise over £60bn a year for public services, and on 22 October asked why higher taxes on extreme wealth remain politically difficult. It offers the tax-led exit to the IEA's cuts; the £60bn is its own claim, not an official costing.

Institute of Economic Affairs

The free-market think tank's Alternative Budget of 19 October would suspend the state pension triple lock for three years, freeze welfare in cash terms and move tax onto a wider VAT. It claims the day-to-day budget returns to surplus in 2027-28, its own projection rather than an official costing.

Resolution Foundation

The living-standards think tank said welfare spending ran about £2.5bn above expectations in September, City AM reported on 21 October, and its economist Greg Thwaites urged targeted energy support. Its figure lands as a Chancellor who calls welfare cuts a moral duty finalises the 28 October Budget.

Institute for Fiscal Studies

Director Helen Miller said a steady-as-she-goes Budget is not an option, with the IFS putting 2029-30 headroom at about £20bn, The Independent reported on 12 October. The IFS puts the cost of avoiding cuts and funding higher defence at around £35bn of tax rises or benefit cuts, more than any headroom estimate in circulation.

Written with AI from Lowdown's published reporting. Not individually reviewed by an editor. Editorial standards.