Public debt could be four times GDP by 2070

The UK’s public debt could swell to three times its GDP within 50 years, the Office for Budget Responsibility has warned. The OBR said public finances are in a “very risky” condition, adding the UK was “more vulnerable” than in the past or than other advanced economies when it came to public debt. In May, debt surpassed 100% of GDP for the first time since 1961. The OBR said the government would need to impose permanent tax rises and spending cuts equivalent to 4.4% of GDP in 2028-29 if it was to prevent debt from surpassing 100% of GDP in the long term. Unless action is taken swiftly, the watchdog warned that debt was on “an unsustainable path” and would reach 310% of GDP by the mid-2070s on its baseline projections. But while this is “alarming in itself”, the prediction “ignores potential future shocks to the public finances”. a future Covid-type event or tackling climate change could propel debt to 435% of GDP in the 2070s, it warned. “The 2020s are turning out to be a very risky era for the public finances,” the OBR said. It added that targets set by chancellor Jeremy Hunt, for underlying debt as a share of GDP to have fallen to 94.6% in 2027-28, were “relatively modest by historical and international standards”. To send feedback, e-mail piers.wehner@eg.co.uk or tweet @PiersWehner or @EGPropertyNews