UK Debt Hits 93.1% of GDP as Bitcoin Falls 50%
Energy shocks and inflation fears drove Bitcoin down 50% from October 2025 to February 2026, reviving debate over the cryptocurrency's original purpose as an alternative to debt-laden banking systems.
Key Takeaway
Soaring UK debt and energy-driven inflation revive Bitcoin's original pitch as an escape from unstable sovereign finance.
UK public sector net debt climbed to 93.1% of GDP in February, reaching £2.88 trillion as borrowing rose £2.2 billion from the year before. The Office for Budget Responsibility projects debt will climb from 94.5% this fiscal year to 96.5% by 2028-29, with the tax burden headed toward 38% of GDP by 2030-31.
The Bank of England held its base rate at 3.75% but warned inflation will tick up to between 3% and 3.5% over the next few quarters. Energy shocks drove the shift: roughly one-fifth of global oil and LNG supply moves through the Strait of Hormuz, and disruptions pushed Brent crude and Dutch TTF gas prices about 60% above pre-shock levels. That could force Ofgem to raise the energy price cap by 35% to 40%.
Bitcoin dropped roughly 50% from October 2025 to February 2026 as bond market jitters and inflation fears spread. The crypto's early 2009 launch included a Times headline about bank bailouts in its genesis block, positioning it as a response to centralized banking failures during the Great Financial Crisis. Hashdex Samir Kerbage said the misalignment of incentives in debt-laden banking is precisely the problem Bitcoin was created to solve, pointing to its 73% year-to-date rise in early 2023 after SVB collapsed.
Household inflation already runs hotter than official figures suggest. The Office for National Statistics household-costs index showed 3.6% inflation across all households in Q4 2025, rising to 3.7% for mortgagors. Average rates on instant-access deposit accounts hit just 2.02% in January, leaving savers 0.98 to 1.48 percentage points below expected CPI.
About 1.8 million fixed-rate mortgages will expire in 2026, forcing borrowers onto higher rates. The OBR projects 10-year gilt yields at 4.5% and 30-year yields at 5.3%, deepening the squeeze on both government finances and households. The Bank of England reported options volatility at its highest level since 2022, signaling market stress not seen in years.
Financial Conduct Authority research shows crypto awareness above 90% in the UK, but only 25% of users said they would invest more if regulation improved. February public sector net borrowing of £14.3 billion marked the highest level for the month since records began in 1993.
This article was written based on reporting from CryptoSlate.
