The UK’s public debt could surge to as high as 300% of GDP over the next half-century, driven by escalating costs related to climate change and an ageing population, the Office for Budget Responsibility (OBR) has warned.
In its latest report on long-term fiscal risks, the independent watchdog cautions that current policy choices and future spending pressures are setting the public finances on an unsustainable path.
The OBR projects that public spending will rise from 45% to over 60% of GDP by 2073, while government revenues are expected to hover around 40% of GDP. Under its baseline scenario, the OBR forecasts that public debt could reach 274% of GDP by the late 2030s, marking the highest level outside wartime conditions, with potential peaks of 300% in scenarios involving additional geopolitical shocks.
These stark projections come ahead of the government’s upcoming budget, where difficult decisions on tax and spending will be necessary. The report underscores the long-term fiscal challenges facing future governments, particularly as the UK navigates its commitment to achieving net-zero emissions by 2050 and copes with a demographic shift towards an older population.
David Miles, a member of the OBR’s budget responsibility committee, stressed the urgency of addressing these fiscal pressures, warning that the current borrowing trajectory is “unsustainable” and risks destabilising the economy. “You can’t just expect the rest of the world to keep buying up UK debt that rises at an ever-accelerating rate,” Miles said, highlighting the need for a significant policy overhaul.
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