Britain must act now to prevent government debt spiralling onto an “unsustainable and ever-rising path”, the UK’s official fiscal watchdog has warned.
The Office for Budget Responsibility (OBR) issued a stark warning that ageing population pressures, rising public spending demands and weaker future tax revenues could push the nation’s finances into a dangerous long-term trajectory.
In its latest Fiscal Risks and Sustainability Report, the OBR said almost every long-term scenario it examined resulted in debt continuing to rise dramatically, warning that government borrowing could eventually grow “explosively” without policy changes.
However, the watchdog stressed that the projections are not predictions of what will happen, as future governments are expected to intervene before the situation reaches that point.
But the message was clear: tackling the problem later will come at a much higher cost.
“The degree of tightening required to prevent debt from following an unsustainable path increases if it is delayed to future years,” the OBR warned.
“This would make it more costly and place more of a burden on future generations.”
The warning comes after the UK experienced one of the biggest increases in public debt among advanced economies over the past two decades.
The OBR said a combination of demographic change and expanding commitments on public services would place increasing pressure on government finances.
An ageing population is expected to drive higher spending on the NHS, social care and state pensions, while defence commitments and investment linked to net zero policies are also forecast to add to future costs.
Under the OBR’s baseline scenario, primary government spending — excluding debt interest payments — is projected to rise from 40 per cent of GDP in 2030-31 to 49 per cent by 2075-76.
At the same time, the Government could face challenges maintaining tax revenues as traditional income streams decline.
The OBR warned that revenue from environmental taxes, particularly fuel duty, is likely to fall as the transition towards electric vehicles reduces demand for petrol and diesel.
The combination creates a difficult fiscal challenge: rising spending commitments at a time when some established tax sources are expected to weaken.
The watchdog said the UK cannot rely on economic growth alone to solve the problem and warned that delaying decisions would limit future governments’ options.
The report adds pressure on ministers already facing difficult choices over taxation, public services and spending priorities.
While the immediate threat of a debt crisis is not forecast, the OBR’s warning highlights a long-term battle over how Britain balances an ageing society, public expectations and financial sustainability.
The message from the watchdog is that the debt problem is not a distant concern — and the longer action is postponed, the harder the choices will become.
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