The OBR has published a new report looking at\u00a0the sustainability of the public finances via scenarios for tax, spending, and debt over 50 years. It\u2019s not pretty\u2026<\/p>\n
It runs scenarios for state finances. Some key findings:<\/p>\n
Debt hits 300% of GDP by the 2070s on current policy. In the OBR\u2019s baseline, public sector net debt climbs from 95% of GDP today to around 300% by 2075-76. Total public spending rises from 44% to 62% of GDP and annual borrowing goes from under 2% to nearly 20% of GDP\u2026
\nSpending to blame: Primary spending rises from 40% to 49% of GDP while receipts stay flat at around 41%. Health and the state pension alone account for most of the problem\u2026
\nBorrowing mostly to pay interest: Debt interest reaches 12% of GDP long-term and becomes the single biggest driver of borrowing, accounting for more than half the total increase. It has already more than doubled as a share of GDP since before the pandemic and, at \u00a3110 billion in 2025-26, is now the third-largest area of public spending after health and welfare.
\nWell is running dry for tax: Receipts are forecast to reach 42.7% of GDP by 2030-31, an historic peak, up from 37% before Covid. The OBR warns that more hikes would carry \u201cincreasing risks and worsening trade-offs\u201d and a \u201clarge negative labour supply effect.\u201d Laffer curve\u2026
\nStealth-tax will drag a minimum-wage worker into the higher rate. If tax thresholds keep rising only with inflation, by the late 2060s a full-time worker on the National Living Wage would be a higher-rate taxpayer, with two-thirds of all earners paying 40% or more. The threshold freezes of the 2020s are already set to raise over \u00a360 billion a year by 2030-31\u2026
\nOnly counts 3.5% of the government\u2019s 5% defence pledge. The headline commitment is 5% of GDP on defence by 2035, but the OBR models only the 3.5% \u201ccore\u201d portion. Confidence in Labour proposals there\u2026
\nDebt doom loop: In the OBR\u2019s worst modelled scenario, higher debt forces gilt yields up to 9.6%, debt reaches 540% of GDP, private investment is crowded out, and GDP per person ends up 14% lower than in a stable-debt world. The report warns that real markets can turn suddenly, with a flight from gilts its models cannot fully capture.
\nThe one \u201csustainable\u201d scenario: Massive productivity rises and a reduction in spending. Who can deliver that?<\/p>\n
A warning to Burnham that his tax and spend plans will make things worse\u2026<\/p>\n
Read the full report below:<\/p>\n","protected":false},"excerpt":{"rendered":"The OBR has published a new report looking at\u00a0the sustainability of the public finances via scenarios for tax,…\n","protected":false},"author":2,"featured_media":78311,"comment_status":"","ping_status":"","sticky":false,"template":"","format":"standard","meta":{"footnotes":"","_share_on_mastodon":"0"},"categories":[4],"tags":[2609,5,6],"class_list":["post-78310","post","type-post","status-publish","format-standard","has-post-thumbnail","category-uk","tag-obr","tag-uk","tag-united-kingdom"],"share_on_mastodon":{"url":"https:\/\/pubeurope.com\/@UnitedKingdom\/116878399394689490","error":""},"_links":{"self":[{"href":"https:\/\/www.europesays.com\/britain\/wp-json\/wp\/v2\/posts\/78310","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/www.europesays.com\/britain\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/www.europesays.com\/britain\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/www.europesays.com\/britain\/wp-json\/wp\/v2\/users\/2"}],"replies":[{"embeddable":true,"href":"https:\/\/www.europesays.com\/britain\/wp-json\/wp\/v2\/comments?post=78310"}],"version-history":[{"count":0,"href":"https:\/\/www.europesays.com\/britain\/wp-json\/wp\/v2\/posts\/78310\/revisions"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/www.europesays.com\/britain\/wp-json\/wp\/v2\/media\/78311"}],"wp:attachment":[{"href":"https:\/\/www.europesays.com\/britain\/wp-json\/wp\/v2\/media?parent=78310"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/www.europesays.com\/britain\/wp-json\/wp\/v2\/categories?post=78310"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/www.europesays.com\/britain\/wp-json\/wp\/v2\/tags?post=78310"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}