London Daily

Focus on the big picture.
Friday, Mar 27, 2026

Tax rises or spending cuts needed to avoid 'unsustainable' public debt, watchdog warns

Tax rises or spending cuts needed to avoid 'unsustainable' public debt, watchdog warns

The Office for Budget Responsibility said the UK is facing a public debt burden at three times more than its current level, as it warned that inflation could lead to a recession in the UK.
Tax rises or spending cuts are needed to avoid an "unsustainable" public debt burden, the UK's fiscal watchdog has warned.

The Office for Budget Responsibility (OBR) said the government faces a debt burden three times more than its current level due to increasing costs from an ageing population and falling future tax revenues from motor fuel.

Debt is on course to reach almost 320% of GDP in 50 years' time - up from 96% currently - if successive governments do not tighten fiscal policy, the agency said in its annual health check of public finances.

It is forecast to rise to more than 100% of GDP in 30 years.

Bringing debt back to 75% of GDP - the level in the government's pre-pandemic budget - "would need taxes to rise, spending to fall, or a combination of both", the OBR said.

This would require curbs of 1.5% of GDP - £37bn a year in today's terms - at the beginning of each decade over the next 50 years, it added.

Public debt is now at levels not seen since the early 1960s, having risen by 2.3 percentage points of GDP in the past year.

"The pressures of an ageing population on spending and the loss of existing motoring taxes in a decarbonising economy leaves public debt on an unsustainable path in the long term," the OBR said.

The government is set to lose a huge source of tax revenue as it moves to ban the sale of new petrol and diesel-powered cars from 2030. Electricity is taxed less heavily.

The UK's ageing population brings with it added healthcare, pensions, and social care costs.

The OBR also said the government has so far spent as much this year to help households with the cost of living crisis - 1.25% of GDP - as it did to support the economy during the financial crisis.

Public debt is now more than double the amount the OBR had expected it to be 20 years ago.

The OBR said risks to public finances include rising inflation, which could tip the economy into recession, "continued uncertainty about our future trading relationship with the EU" and a resurgence of COVID cases.

Other factors are rising interest rates and growing geopolitical tensions, which are exemplified by Russia's war in Ukraine and have manifested in trade barriers between countries.

The government spent £7.6bn on interest payments to service its debt in May, far above the £5.1bn predicted by the OBR.
Newsletter

Related Articles

0:00
0:00
Close
Jaguar Land Rover Halts Production at UK Plant Amid Supplier Disruption
UK Police Reverse Position, Confirm Arrests Will Resume for Palestine Action Protests
UK Small Businesses Face Europe’s Steepest Cost Pressures, New Survey Reveals
US Envoy Urges UK to Proceed with King’s Visit Amid Diplomatic Sensitivities
FTSE 100 Drops Over One Percent as Middle East Tensions Weigh on Markets
UK CO2 Plant Set to Reopen as Authorities Move to Safeguard Supplies Amid Middle East Tensions
Trump Urges Stronger Defence Investment as He Questions Allied Naval Capabilities
New COVID Variant Detected in UK Raises Concerns Over Vaccine Effectiveness
FTSE Russell Moves to Standardise Free-Float Rules for UK and International Listings
HBO Max Launches in UK and Ireland, Marking Major Step in Global Streaming Expansion
UK Signals Readiness to Seize Russian ‘Shadow Fleet’ Vessels in Escalation of Sanctions Enforcement
Escalating Middle East Conflict Seen as Major Threat to UK Economic Stability
Early Challenges Mark Prince Harry and Meghan’s Australia Visit
UK Government Rejects Cover-Up Claims After Theft of Former PM Aide’s Phone
Cyprus Opens Strategic Talks with UK Over Sovereign Base Areas
UK Faces Risk of Sharp Inflation Surge Despite Stable Pre-Crisis Figures
UK Police Arrest Two Over Suspected Antisemitic Arson as Iran Link Investigated
UK Inflation Holds at Three Percent Ahead of Oil Price Shock from Iran Conflict
UK Fuel Prices Face Upward Pressure as Global Oil Trends Raise Cost Outlook
Girlguiding UK Sets September Deadline for Membership Policy Change Affecting Trans Participants
Germany and UK Accelerate Wind Power Expansion to Strengthen Energy Security
UK Moves to Ban Cryptocurrency Donations to Political Parties Over Foreign Influence Concerns
UK and Turkey Finalise Major Air Defence Agreement Worth Billions
Apple Introduces Mandatory Age Verification for iPhone Users in the UK
Diverging Views Emerge Over Meghan Markle’s Planned Australia Appearance
Trump Signals Frustration with UK Leadership Amid Diverging Approaches to Iran Conflict
UK Government Takes Control of Hunterston B as Landmark Nuclear Decommissioning Begins
UK Public Inflation Expectations Jump Sharply in March, Raising Pressure on Bank of England
UK Ministers Warn Expanded North Sea Drilling Would Deepen Exposure to Global Energy Volatility
Delayed UK Defence Investment Plan Leaves Suppliers Under Severe Financial Strain
Can Iran Strike the UK? Assessing the Real Military Threat as Conflict Escalates
Sanctioned Iranian Banker Linked to Luxury Marbella Villa Through UK Corporate Structure
Casey Bloys Navigates HBO Max UK Launch, Paramount Integration and Industry Buzz Over Netflix Meeting
Iran Conflict Sparks Sharp Turbulence in UK Mortgage Market, Reaching Pandemic-Era Disruption Levels
Major Donor Urges University of Kentucky to Reconsider Mitch Barnhart’s Post-Retirement Role
United Kingdom Moves to Lead International Effort to Reopen Strait of Hormuz
UK Police Investigate Targeted Attack on Jewish Ambulance Vehicles
UK Police Investigate Targeted Attack on Jewish Ambulance Vehicles
Senior UK Advocate Criticises Barnhart Retirement Appointment, Calls for Reconsideration
UK Finds No Evidence of Direct Iranian Threat to Britain, Says Prime Minister Starmer
Assessing Iran’s Strike Capability and the UK’s Readiness Amid Rising Tensions
NATO Unable to Confirm Iran’s Role in Strike on UK-US Base as Tehran Denies Involvement
University of Kentucky’s Youling Xiong Receives SEC Faculty Achievement Award for 2026
Trump Highlights Satirical Portrayal of UK Leadership Amid Talks with Prime Minister Starmer on Iran Conflict
Trump Highlights Satirical Portrayal of UK Leadership Amid Talks with Prime Minister Starmer on Iran Conflict
UK Fuel Prices Surge Toward Crisis Levels as Experts Warn of Further Sharp Increases
UK Fuel Prices Surge Toward Crisis Levels as Experts Warn of Further Sharp Increases
Duchess of Sussex Secures ‘As Ever’ Trademark Rights in Australia Ahead of High-Profile Visit
UK Reaffirms Security as Officials Reject Claims of Immediate Iranian Missile Threat
Rising Middle East Tensions Spark ‘Trumpflation’ Debate Over Impact on UK Households
×