Debt and deficit

The national financial situation in the UK is dire and, perhaps, should be treated as the No 1 problem.

Two recent publications spell out the problem:

• Office for Budget Responsibility ‘Fiscal risks and sustainability‘ report
• House of Commons Library ‘The budget deficit: a short guide.’

The problem is in plain sight. The figures are published by official bodies, yet few seem to be addressing it.

In brief.

• Total debt has now reached 100% of GDP.
• Interest on the debt now accounts for 10% of government expenditure.
• 70% of the money borrowed each year by the government is spent on interest payments on previous debt.
• An aging population and pension and other commitments means that, if we continue like this, debt will rise to 200% of GDP and government will be spending so much on interest payments that they will have even less for real things and have to borrow even more.
• The deficit for 2023/24 was £131billion or just under £2000 per person in the UK.
• Most of this situation developed under the previous Conservative government.
• Minor attempts to reduce spending by the current (2025) Labour government have been prevented by a backbench revolt of Labour MPs.
• There are no detailed plans by any party or think-tank to explain what balancing the books would look like for Britain.

Video summary

A summary of the current situation

The UK’s financial future is on a collision course with disaster, and we’re running out of time to act. The Office for Budget Responsibility (OBR) has crunched the numbers, and they’re alarming. If we keep taxes, benefits, and government spending as they are, the budget deficit—already a stubborn 5% of the nation’s wealth—will skyrocket to 20% every year over the next 50 years. National debt will balloon from 100% of GDP to a staggering 270%. Why? Because our population is aging fast. Fewer young people will be working and paying taxes, while more retirees demand pensions and healthcare.

This isn’t just a problem—it’s a crisis that could cripple our economy, with borrowing costs spiralling out of control. The biggest culprits are state pensions and healthcare. The OBR shows that pension spending has already jumped from 2% of GDP in the 1950s to 5% today, and it’s set to hit 8% in the coming decades. Older people rely heavily on the NHS and social care, driving costs even higher.

This isn’t a surprise—experts have been warning about this for years. Yet, politicians act like it’s someone else’s problem, kicking the can down the road because they won’t be in office when the bill comes due. They assume, lazily, that things can’t get that bad, so something will magically fix it. But hope isn’t a plan.

Worse, we’ve made this mess bigger with bad decisions. The triple lock on pensions—where pensions rise by the highest of inflation, earnings, or 2.5%—is a political gimmick to win older voters, not a sensible policy. It’s set to add over half of the 2.7% GDP increase in pension costs, and by 2030, it’ll cost three times more than planned because of unpredictable earnings and inflation. If this continues, pensions could eat up an extra 1.5% of GDP by 2075.

Back in the 2000s, we could have kept pensions tied to inflation and encouraged private savings through auto-enrollment, setting us up for a stable future. Instead, we chose a costly promise that’s pushing us toward a financial cliff.

The numbers are jaw-dropping. In 50 years, we’ll need an extra 11–12% of GDP—about £200 billion in today’s money—to cover costs for the elderly. That’s like doubling everyone’s income tax, something no one would accept. Even massive tax hikes on the wealthy or businesses wouldn’t come close to filling this gap. We’re sleepwalking into a future where the government can’t pay its bills, and services we rely on could collapse.

Politicians know this, but they’re dodging the tough choices. They see the OBR’s warnings and shrug, hoping a crisis will force someone else to act. We can’t afford this head-in-the-sand approach. The time for bold reform is now—scrap the triple lock, rethink pensions, and prioritize a system that works for everyone, not just older voters. If we don’t act, the consequences will hit us all—hard. Let’s demand better from our leaders before it’s too late.