UK Faces 'Daunting' Risks as Debt Soars to Three Times Economy

The UK faces significant tax rises and rising debt levels, according to a report by the Office for Budget Responsibility (OBR). The OBR warns that the UK cannot afford the promises made to the public and that the country is vulnerable to future crises due to its high debt levels. The OBR forecasts that levels of government debt could soar to three times the size of the economy by 2075. The government is under pressure to spend more on social care and defence, and the OBR's report is a plea for realism about the choices ahead.

The Office for Budget Responsibility (OBR) has issued a stark warning about the UK's financial health, forecasting significant tax rises and rising debt levels. According to the OBR's latest report, the UK cannot afford the promises made to the public and is vulnerable to future crises due to its high debt levels.

The OBR's report highlights that the UK's public finances are in a precarious position. At the end of 2024, the government's deficit stood at 5.7% of GDP, and debt levels are at 94% of GDP, making it one of the highest among advanced economies [1]. The OBR forecasts that government debt could soar to three times the size of the economy by 2075 if current trends continue.

The report also notes that efforts to put the UK's public finances on a more sustainable footing have been limited and temporary. Public sector net borrowing has oscillated around 5% of GDP for the past four financial years, and while there have been some measures to reduce debt, it has continued to rise due to the scale of the Covid pandemic and the energy crisis. The OBR warns that the UK's debt levels are unsustainable and that the country is at risk of a fiscal crisis.

The OBR's report comes as the UK government is under pressure to spend more on social care and defense. However, the OBR's warning is a plea for realism about the choices ahead. The government will need to make tough decisions about how to balance its budget and manage its debt levels.

The OBR's report underscores the importance of independent economic analysis in managing the UK's public finances. The OBR's forecasts and assessments are crucial for financial investors, as they help determine the government's borrowing costs and the risks associated with investing in UK government bonds.

References:
[1] https://www.bbc.co.uk/news/explainers-63159607
[2] https://obr.uk/frs/fiscal-risks-and-sustainability-july-2025/