Britain will spend more than half a trillion pounds servicing the national debt between now and the end of the decade, Budget documents reveal.
The Office for Budget Responsibility said debt interest payments would total £672billion between 2024-25 and 2029-30 – or more than £100billion a year. T
he annual bill dwarfs the defence Budget, which is due to reach £83billion next year.
Ball and chain: The Office for Budget Responsibility said debt interest payments will total £672bn between now and 2029-30 – or more than £100bn a year
The projected cost of servicing the debt has soared as a result of this week’s Budget in which Rachel Reeves embarked on a dramatic borrowing binge to fund her spending plans.
The Chancellor will have borrowed another £536billion by the end of the decade – pushing the national debt above £3trillion for the first time.
Instead of borrowing falling from £87billion this year to £39billion in 2028-29, as planned by the previous chancellor Jeremy Hunt, the deficit under Reeves will hit £127billion this year and only fall to £70billion by 2029-30.
The Office for Budget Responsibility described the Budget as ‘one of the largest fiscal loosenings of any fiscal event in recent decades’.
The national debt stood at about £350billion at the start of millennium but has soared since then, in part due to a string of crises including the financial crash and the Covid-19 pandemic.
While it took three centuries of borrowing for the debt to hit £350billion, Reeves will borrow the same again in a little over three years.
The borrowing binge has created jitters on the bond markets with the ten-year gilt yield topping 4.5 per cent yesterday for the first time in a year.
Rising debt interest payments mean the Government will need to raise substantially more in tax than it spends on public services, according to the Institute for Fiscal Studies.
IFS director Paul Johnson said: ‘We need to run substantial primary surpluses to avoid debt running away.
‘That means the Government needs to take more from us in tax and other revenues than it gives back in everything other than debt interest payments.
‘That’s not a happy place to be, it’s not a place we have been for a very long time, but the Government has no choice about that.’
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