Getty ImagesUK national debt is on course to treble over the next half a century due to several pressures, according to the government’s official forecaster.
Those pressures include an ageing population, climate change, and rising geopolitical tensions, the Office for Budget Responsibility (OBR) said in a report.
The OBR said without extra tax revenues or a return to post-war productivity levels, the public finances were not sustainable over the long term, and “something has got to give”.
Chief Secretary to the Treasury Darren Jones said: “The OBR has laid bare the shocking state that our public finances were left in by the previous government.”
Jones added that the UK was facing the “highest debt since the 1960s, highest taxes since the 1940s, and debt on track to be almost three times our GDP”.
The Conservative Party has been contacted for comment.
Debt is the total amount of money owed by the government that has built up over years.
It rises when there is a deficit – when the government spends more than it receives in income – and falls in those years when there is a surplus – when it spends less than it receives.
The higher the debt-to-GDP ratio, the less likely a country is to pay back its debt in full.
UK national debt is currently at almost 100% of GDP.
The OBR says its base scenario is a national debt of 274% of GDP in 2071, with risks from war, disease, cyber-conflict and trade tensions pushing that even higher.
Over the next 50 years, the government’s public spending is projected to rise from 45% to over 60% of GDP.
However, income generated is predicted to remain at around 40% of GDP.
By 2071, the OBR projects the equivalent of a more than £200bn per year increase in public spending on health, social care, pensions and related benefits.
Its Fiscal Risks and Sustainability Report claims the previous and current UK government’s aspirations to raise defence spending to 2.5% of GDP could add pressure to the public finances.
In addition, the cost of transitioning to net zero, battling extreme weather linked to climate change, and a falling birth rate could also lead to more spending and less revenue, it said.
The bill for state pensions and social care is set to rise substantially.
Some of this would be mitigated by lower education and working-age benefit spending.
The public finances are already under pressure due to “a succession of extraordinary shocks” over the past two decades, the report notes.
This includes the global financial crisis, the pandemic and the energy crisis.
Based on policy settings from March 2024, the analysis warns that public finances will be put on “an unsustainable path”.
A spokesperson for the Prime Minister said the government is seeking to “restore economic stability”.
“Work has begun to support the economy and businesses, and that’s what our focus will be on”, she said.