Overview

• Ray Dalio has labelled Britain’s fiscal path a “debt doom loop,” where rising borrowing costs, higher taxes and sluggish growth reinforce each other and risk driving wealthy taxpayers away.
• Public debt has climbed to about £2.87 trillion, equating to 101% of GDP, with interest payments now consuming some £110 billion of annual government revenue.
• The IMF has urged Chancellor Rachel Reeves to take radical action by balancing spending cuts with tax increases to steer borrowing back to sustainable levels.
• Dalio cautioned that bond markets remain complacent about sovereign debt risks and recommended investors hold at least 15% of assets in gold or bitcoin as a hedge against currency devaluation.
• With the autumn Budget approaching, Reeves must address a potential £20 billion funding gap without exacerbating capital flight or undermining growth prospects.