If the government spends more than its received income it will have to borrow the difference. Selling securities , which are IOUs paying interest yearly which will be bought back sometime in the future. Securities are sometimes called gilts, stocks or bonds. The total amount owed by the government to UK citizens and foreigners at a particular moment in time is called the national debt . The money raised may have been spent on capital goods which increase our ability to produce goods.
Interest has to be paid on the debt.
These pages are based on original material written by Richard Young of Wood Green School Witney.