the UK Public Finance It is in ‘Risky’ situation with drGovernment debt, which is on track to reach 310 percent of GDP (gross domestic product) in 50 years, the Office for Budget Responsibility (OBR, for its English acronym) warned.
The tax regulator said in the report that The UK is “more vulnerable” than in the past or other advanced economies when it comes to government debt, Which in May exceeded 100 percent of GDP for the first time since 1961.
“Fiscal pressures have increased significantly since we made one of these forecasts (in 2022),” said Richard Hughes, OBR President.
“Interest rates are rising, inflation is rising, and demographic change is happening faster than we thought, with more people leaving the workforce,” he said. All this is putting much greater and faster pressure on public finances in the UK than we are seeing in other countries.”
A succession of shocks over the past three years has led to the country’s deepest recession United kingdom In three centuries, the sharpest rise in energy prices since the 1970s and the sharpest sustained rise in borrowing costs since the 1990s, according to Report on financial risks.
These developments have pushed the public debt to its highest levels since the mid-1940s, the national debt to its highest level since the early 1960s, and the cost of servicing that debt to a peak of about 40 years.
These developments undermined hopes for tax cuts in the medium term. Minister of Finance , Jeremy Hunt Rule out big discounts Before the election in a recent interview with financial times.
according to OBRAmong the challenges facing the country a An additional £15.7 billion indebtedness linked to inactivity Due to prolonged illness since the pandemic, a trend not seen in most other advanced economies. The country also faces a £23 billion increase in public pension spending by 2027-2028 compared to the start of the decade, as baby boomers (people) born between 1946 and 1964) retired.
Increased public investment is also needed to achieve the UK’s net carbon emissions target by 2050 OBR It is estimated that about 317 billion pounds would be neededbut so far The government has only committed the equivalent of £22.5 billion.
In contrast to the increases in France and Germany, British investment in low-carbon technologies fell by 0.2% of GDP in 2022, confirming that it is one of the most gas-dependent European economies.
the OBR He also noted that The United Kingdom has the highest proportion of inflation-related debt of any major developed economywhich led to an increase in the cost of debt servicing; Lower average maturities for government bond stocks, and more debt by private investors than most G7 countries.
Rachel Reeves, Labor MP and shadow adviser, said: “This report shows just how far behind our peers we are, how vulnerable our economy is, and highlights again that the government is not taking measures in areas such as energy security to help reduce bills.”
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