The UK's public finances are vulnerable, marked by high debt, deficits, and borrowing costs. The Office for Budget Responsibility warns that national debt could reach 270% of GDP by 2070 without policy changes. Economic shocks, like the Covid pandemic and energy crisis, have yielded limited recovery success. Global pressures, including trade wars and increased defence spending, further challenge fiscal stability. Rising pensions costs are anticipated due to an ageing population and insufficient contributions to private pensions, highlighting the urgent need for effective fiscal policies to ensure sustainability.
The UK has the sixth-highest debt, fifth-highest deficit and third-highest borrowing costs among 36 advanced economies, indicating significant fiscal vulnerabilities ahead.
Without policy changes, national debt is projected to reach 270% of GDP by 2070, underscoring an urgent need for fiscal reform to address sustainability.
The OBR notes that rising geopolitical tensions and trade wars contribute to increasing defence spending, pressuring public finances further in the coming years.
Inadequate levels of saving into private sector pensions pose risks, as the UK faces rising pensions costs amid an ageing population.
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