The United Kingdom’s state debt has reached a critical level, equivalent to the country’s annual output, according to recent data from the Office for National Statistics (ONS). This means that the public sector net debt stands at 100% of the country’s Gross Domestic Product (GDP), a level not seen since the early 1960s. This alarming figure has prompted warnings from Prime Minister Keir Starmer and Finance Minister Rachel Reeves of tough decisions on tax and spending ahead of the government’s maiden budget on October 30.
The government is already facing backlash over its decision to scrap the winter fuel-benefit scheme for 10 million pensioners, a move defended by Starmer as a necessary “tough choice” to address the £22-billion “black hole” in public finances left by the previous Conservative administration. The data also revealed the highest August borrowing on record, outside of the COVID pandemic, with senior UK Treasury official Darren Jones stating, “Debt is 100 percent of GDP, the highest level since the 1960s”.
Looking ahead, the forecast is bleak, with the Office for Budget Responsibility predicting that UK state debt could almost triple over the next 50 years due to an aging population and climate change. This projection is based on rising public spending, expected to exceed 60% of GDP, while revenues remain stagnant at around 40%. The pressure of an aging population will significantly impact public finances, with the “old-age dependency ratio” increasing due to rising life expectancy and low fertility rates.
