UK public debt set to nearly triple by mid-2070s, warns fiscal watchdog

By Aysu Bicer

LONDON (AA) - Britain’s national debt is projected to nearly triple over the next 50 years, according to the Office for Budget Responsibility (OBR) on Thursday.

In its newly released fiscal risks and sustainability report, the fiscal watchdog outlined long-term pressures that will drive the UK’s public finances onto an "unsustainable path" without significant policy changes.

Based on current policies and demographic trends, UK public debt is forecast to soar from under 100% of GDP to a staggering 274% by the mid-2070s.

The report highlighted key factors fueling this surge, including the economic impact of an aging population, the fiscal demands of tackling climate change, and increasing geopolitical tensions.

- Aging population and shrinking workforce

The OBR stresses that one of the most significant challenges will be the UK’s ageing population.

As birth rates decline and the post-war "baby-boom cohort” moves through retirement, the country will face growing pressure on its public services, particularly pensions and healthcare, it said.

Meanwhile, a shrinking workforce will put downward pressure on tax revenues, creating a dangerous fiscal imbalance.

The fiscal impact of climate change is another major concern.

The OBR warned that meeting the government’s target of net zero carbon emissions by 2050 will come at a significant cost.

Additionally, the country will need to invest in coping with rising global temperatures and increasingly severe weather patterns. Both will require significant public spending, further straining the budget.

Global security risks are also set to increase financial pressures.

The report noted that both the current and previous UK governments have expressed ambitions to raise defense spending to 2.5% of GDP.

With growing geopolitical instability, including ongoing conflicts and heightened tensions, the cost of maintaining national security is expected to climb.

In the OBR’s baseline projection, public spending is expected to rise from 45% of GDP today to over 60% by the mid-2070s.

However, government revenues are forecast to stay relatively stable, at around 40% of GDP, leading to a growing budget deficit and a ballooning debt load.