The percentage of the UK’s Gross Domestic Product (GDP) spent on healthcare, was around 11.1% in 2024, a slight increase from the previous year but still higher than pre-pandemic levels (according to the Office for National Statistics).
So. What are the key factors that affect that spending?
The pandemic caused a large and rapid increase in healthcare spending in 2020 and 2021, peaking at 12.4% of GDP in 2021. This included significant spending on vaccination programmes and testing services. While the percentage of GDP has since decreased, it remains above pre-pandemic levels.
Aging and growing population: As the UK population grows and people live longer, the demand for healthcare and the cost of providing it increases. Spending on healthcare for individuals over 85 is significantly higher than for younger age groups.
Over 60% of the NHS budget goes toward staff salaries. In order to compete with the private sector and attract a highly skilled workforce, staff wages must rise in real terms, which increases cost pressure on the health service.
Efficiency growth in the NHS has historically lagged behind that of the wider economy. For example, a BBC analysis noted that while NHS inputs were 32% higher in the second half of 2024 compared to 2019, outputs were only up by 7%.
A higher percentage of GDP spending does not always mean higher spending per person. According to the OBR, the UK spent a higher percentage of its GDP on healthcare than the advanced-economy median in 2022, but a lower amount per person. This is due to the UK’s lower GDP per capita compared to many comparable nations.
