Government debt will rise to 140% of GDP, think tank forecasts

Published

2 years ago

October 19, 2023

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High levels of national debt will hurt the UK’s ability to fund public services and respond to economic crises, a think tank has said.

Not in the last 300 years has there been as large a peace time increase in the amount of government borrowing, the Resolution Foundation said.

In the last 15 years alone there’s been a trebling of the ratio of debt to a measure of economic output, called gross domestic product (GDP), the foundation’s Built to Last report said.

Since 2007 the UK’s debt-to-GDP ratio grew from 36% to 100% of GDP in May this year.

The knock-on effect is difficulty in funding services and increasing spending in the event of potential future economic crises, the report said.

And the debt ratio will rise further, according to the report authors.

They forecast it will reach roughly 140% of GDP over the next 50 years if current market expectations are correct – that the UK continues to have high interest rates in the longer term.

Present market expectations, according to market data provider Refinitiv, are that the Bank of England’s base rate will remain above 5% to the end of December 2024.

The central bank has brought up interest rates to 5.25%, making borrowing more expensive and saving more rewarding, in an effort to take money out of the economy in an effort to reduce spending and bring down inflation.

Inflation, the rate of price rises, has remained stubbornly high after COVID-19 era supply chain problems pushed up costs, and was significantly worsened by the energy price highs seen after Russia’s invasion of Ukraine.

Each percentage point rise in the base interest rate is adding around £15bn to government borrowing costs in five years’ time as the amount owed on that debt goes up, the report said.

That cost could therefore rise to roughly 5% of GDP – the highest for more than 70 years, it added.

Reducing state debt has political significance as Prime Minister Rishi Sunak has made it one of his five priorities to bring down borrowing.

The report contains criticism of government spending and calls for new a monetary policy for the Bank of England.

Specifically, two forms of state support were poorly targeted, the report said; the “generous” grants to self-employed workers who did not report income falls in the COVID-19 years and the universal nature of household energy supports – such as the energy price guarantee – given to customers up to the end of June to deal with energy bills.

Had the schemes been targeted to those who needed financial help, their overall cost could have been reduced by £35bn, the Resolution Foundation said.

Monetary policy should be changed with the target rate of inflation brought up from 2% to 3%, the report added, but this should only be done when interest rates are low again and when the rate of inflation has reached the current 2% goal.

UK

Families of British Air India crash victims ‘feel utterly abandoned’ and hit out at government

Published

5 hours ago

June 16, 2025

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Families of British Air India crash victims 'feel utterly abandoned' and hit out at government

The families of three of the British victims of last week’s Air India crash in Ahmedabad have criticised the UK government’s response to the disaster, saying they “feel utterly abandoned”.

It comes after an Air India Dreamliner crashed shortly after take-off from Ahmedabad airport in western India, killing 229 passengers and 12 crew. One person on the flight survived.

Among the passengers and crew on the Gatwick-bound aircraft were 169 Indian nationals, 53 Britons, seven Portuguese nationals and one Canadian national.

In a statement, the families of three British citizens who lost their lives said they were calling on the UK government to “immediately step up its presence and response on the ground in Ahmedabad”.

The families said they rushed to India to be by their loved ones’ sides, “only to find a disjointed, inadequate, and painfully slow government reaction”.

“There is no UK leadership here, no medical team, no crisis professionals stationed at the hospital,” said a family spokesperson.

“We are forced to make appointments to see consular staff based 20 minutes away in a hotel, while our loved ones lie unidentified in an overstretched and under-resourced hospital.

“We’re not asking for miracles – we’re asking for presence, for compassion, for action,” another family member said.

“Right now, we feel utterly abandoned.”

The families listed a number of what they called “key concerns”, including a “lack of transparency and oversight in the identification and handling of remains”.

They also demanded a “full crisis team” at the hospital within 24 hours, a British-run identification unit, and financial support for relatives of the victims.

A local doctor had “confirmed” the delays in releasing the bodies were “linked to severe understaffing”, according to the families, who also called for an independent inquiry into the UK government’s response.

“Our loved ones were British citizens. They deserved better in life. They certainly deserve better in death,” the statement added.

Sky News has approached the UK’s Foreign, Commonwealth and Development Office for comment.

Families and friends of the victims have already expressed their anger and frustration – mostly aimed at the authorities in India – over the lack of information.

UK

Tributes paid to mother-of-four among two skydivers who died in ‘tragic accident’

Published

7 hours ago

June 16, 2025

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Tributes paid to mother-of-four among two skydivers who died in 'tragic accident'

A mother-of-four was among two skydivers who died following a “tragic accident” at an airfield in Devon.

Belinda Taylor was pronounced dead at the scene following Friday afternoon’s incident in the area of Dunkeswell Aerodrome near Honiton.

On Facebook, her partner Scott Armstrong wrote: “I miss you so much, you were my best friend.

“Thank you for everything you’ve done for me, from making my children feel at home to putting up with my mess.

“… there’s just so much that I don’t have the words to express it.

“I feel so lost. I don’t know where home is without you.”

Ms Taylor’s eldest son, Connor Bowles, paid tribute to a “selfless woman” who was also a grandmother to two young children.

Thanking investigators for their work so far, he told DevonLive: “She will be deeply missed and will leave an everlasting impression on all those she has met in life.”

The identity of the second skydiver who died is yet to be made public, but their family has been informed.

British Skydiving has confirmed it will be investigating the incident – with a report sent to the coroner, the Civil Aviation Authority and the police.

In a statement, SkydiveBuzz, which operates at the airfield, said its “deepest condolences go out to the families, friends and everyone affected by this devastating event”.

A spokesperson added: “Safety is, and always has been, our top priority. We are fully cooperating with the investigation and continue to uphold the highest possible standards in everything we do.

“No further details will be provided at this time. We respectfully ask for privacy for all those affected, including our team, during this incredibly difficult time.”

UK

Career spy Blaise Metreweli to become first woman to head MI6

Published

10 hours ago

June 16, 2025

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Career spy Blaise Metreweli to become first woman to head MI6

Career spy Blaise Metreweli will become the first woman to head MI6 in a “historic appointment”, the prime minister has announced.

She will take over from Sir Richard Moore as the 18th Chief, also known as “C”, when he steps down in the autumn.

“The historic appointment of Blaise Metreweli comes at a time when the work of our intelligence services has never been more vital,” Sir Keir Starmer said in a statement released on Sunday night.

“The United Kingdom is facing threats on an unprecedented scale – be it aggressors who send their spy ships to our waters or hackers whose sophisticated cyber plots seek to disrupt our public services.”

Of the other main spy agencies, GCHQ is also under female command for the first time.

Anne Keast-Butler took on the role in 2023, while MI5 has previously twice been led by a woman.

Until now, a female spy chief had only headed MI6 – also known as the Secret Intelligence Service (SIS) – in the James Bond movies.

Dame Judi Dench held the fictional role – called “M” in the films instead of “C” – between 1995 and 2015.

Ms Metreweli currently serves as “Q”, one of four director generals inside MI6.

The position – also made famous by the James Bond films, with the fictional “Q” producing an array of spy gadgets – means she is responsible for technology and innovation.

Ms Metreweli, a Cambridge graduate, joined MI6 in 1999.

Unlike the outgoing chief, who spent some of his service as a regular diplomat in the foreign office, including as ambassador to Turkey, she has spent her entire career as an intelligence officer.

Much of that time was dedicated to operational roles in the Middle East and Europe.

Ms Metreweli, who is highly regarded by colleagues, also worked as a director at MI5.

In a statement, she said she was “proud and honoured to be asked to lead my service”.

“MI6 plays a vital role – with MI5 and GCHQ – in keeping the British people safe and promoting UK interests overseas,” she said.

“I look forward to continuing that work alongside the brave officers and agents of MI6 and our many international partners.”

Sir Richard said: “Blaise is a highly accomplished intelligence officer and leader, and one of our foremost thinkers on technology. I am excited to welcome her as the first female head of MI6.”