Future Retirement Success
  • Politics
  • Business
  • Investing
  • Stocks
  • Politics
  • Business
  • Investing
  • Stocks

Future Retirement Success

Business

UK debt could triple to 300% of GDP within 50 years, OBR warns

by September 13, 2024
September 13, 2024
UK debt could triple to 300% of GDP within 50 years, OBR warns

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.

The transition to a green economy is expected to have substantial fiscal implications, particularly as fuel duty revenues—a key government income stream—decline with the rise of electric vehicles. The OBR estimates that fuel taxes, which currently contribute about 1% of GDP, will drop to just 0.1%, adding 20 percentage points to the national debt, even if a comprehensive carbon tax is implemented. However, if new motoring levies are introduced to replace fuel duties, the debt impact could be mitigated by up to 12 percentage points.

The report also emphasises the critical role of productivity growth in alleviating fiscal pressures. The OBR posits that even a modest increase in productivity could significantly reduce the projected rise in debt, with a 0.1% improvement potentially lowering the debt-to-GDP ratio by 25 percentage points over the coming decades. However, the UK’s recent productivity growth has been sluggish, averaging just 0.5% annually over the past 15 years, compared to pre-2008 rates of over 2%.

In the face of these challenges, the OBR warns that future governments will need to take decisive action, including raising taxes, cutting spending, and pursuing policies to stimulate productivity growth. The report also notes the potential impact of migration as a short-term fiscal boost, with higher-than-expected net migration projected to increase the UK’s population from 68 million to 82 million by 2074.

However, as the migrant population ages, the initial fiscal benefits are expected to diminish, presenting additional challenges for the UK’s long-term fiscal outlook. As the government prepares to deliver its first budget, the OBR’s findings highlight the difficult balancing act required to ensure sustainable public finances while supporting economic growth and meeting the demands of an ageing society.

Read more:
UK debt could triple to 300% of GDP within 50 years, OBR warns

0
FacebookTwitterGoogle +Pinterest
previous post
Housing crisis leaves 21 hopeful tenants battling for each rental property
next post
House GOP rolling out bill to block China from accessing US ports

You may also like

The health problems that can afflict high level...

July 19, 2024

UK Households with No Work Reach 12-Year High...

May 30, 2024

How to Choose The Best Business Coach?

September 27, 2024

Flexi time used by staff to skive off,...

September 5, 2022

Government scheme boosts UK chip start-ups with £10...

August 1, 2024

The Essential Handbook for Purchasing Your Dream Home...

April 10, 2025

Client courting: 3 tactics for building strong business...

July 7, 2023

HMRC nudge letters cause needless worry to UK...

October 6, 2023

Electric car production nears record for January

February 24, 2023

Vauxhall to close Luton plant, over 1,100 jobs...

November 27, 2024

    Get free access to all of the retirement secrets and income strategies from our experts! or Join The Exclusive Subscription Today And Get the Premium Articles Acess for Free

    By opting in you agree to receive emails from us and our affiliates. Your information is secure and your privacy is protected.

    Recent Posts

    • Good Riddance to the Penny

      June 5, 2025
    • Oracle Fusion Testing: The UK Leader’s Playbook for Automation

      June 5, 2025
    • Blue state Republicans threaten rebellion if Senate changes key provision in Trump’s ‘big, beautiful bill’

      June 5, 2025
    • Ricketts, Fetterman team up for crackdown on China’s attempts to purchase US farmland

      June 5, 2025
    • Hamas working to ‘sabotage’ Trump-backed aid group with ‘fake news’: Israeli official

      June 5, 2025
    • Longtime Trump loyalist flips on GOP’s ‘big, beautiful bill’

      June 5, 2025

    Categories

    • Business (8,148)
    • Investing (2,009)
    • Politics (15,529)
    • Stocks (3,128)
    • About us
    • Privacy Policy
    • Terms & Conditions

    Disclaimer: futureretirementsuccess.com, its managers, its employees, and assigns (collectively “The Company”) do not make any guarantee or warranty about what is advertised above. Information provided by this website is for research purposes only and should not be considered as personalized financial advice. The Company is not affiliated with, nor does it receive compensation from, any specific security. The Company is not registered or licensed by any governing body in any jurisdiction to give investing advice or provide investment recommendation. Any investments recommended here should be taken into consideration only after consulting with your investment advisor and after reviewing the prospectus or financial statements of the company.

    Copyright © 2025 futureretirementsuccess.com | All Rights Reserved