Particle.news

Download on the App Store

OBR Warns of Long-Term Debt Surge as Reversed Spending Cuts Widen Deficit

With borrowing costs climbing, recent reversals on welfare and winter fuel payments have undermined consolidation efforts, eroding the government’s fiscal buffer.

Image
Image
Image

Overview

  • The OBR reports that UK government debt stood at 94% of GDP at end-2024 and rose to 96.4% by May, ranking sixth highest among advanced economies.
  • Reversals of planned welfare benefit cuts and the reinstatement of winter fuel payments have added over £6 billion to borrowing requirements ahead of the autumn Budget.
  • Attempts to put public finances on a more sustainable footing have achieved only limited and temporary success, as planned tax rises and spending reductions were largely abandoned.
  • Structural obligations – notably the cost of the state pension triple lock, planned defence spending rising to 5% of GDP by 2035 and climate adaptation measures – pose mounting pressures on future budgets.
  • Without further reforms, the OBR projects national debt will exceed 270% of GDP by the early 2070s due to expanding pension, defence and climate-related commitments.