Next government may struggle to fund public services due to biggest debt challenge since 1950s
The next government could struggle to fund public services because of the biggest debt challenge since the 1950s, according to a respected thinktank.
Whichever party wins the next election may be unable to fund key services if politicians are not transparent about the trade-offs they face, the Institute for Fiscal Studies (IFS) says in a new report.
Higher borrowing costs, as a result of increased interest rates, as well as low economic growth and both the Conservatives and Labour committing to reduce debt, leave the next government with little financial flexibility, the IFS adds.
It could be one of the most difficult parliaments for tax and spending since the 1950s, according to the report.
It says: “These challenges – unlike a conflict, pandemic or financial crisis – are entirely predictable.
“None can be meaningfully confronted by a government that wilfully ignores reality and the need to choose between difficult competing options.
“As tempting as it may be to engage in ‘cakeism’ – to seek to have the government’s fiscal cake and eat it – any party serious about governing after the election should resist the urge. The electorate surely deserves better than that.”
The government will have to achieve something that hasn’t been done in 20 years – tax takes and state revenue streams will have to rise to become greater than government outgoings.
This is more difficult at present with the current high debt interest payments and low growth forecasts.
Achieving debt reduction goals by raising taxes may also be politically unpalatable as the UK tax burden, the amount of taxes paid as a percentage of national income, is at a high not seen since the Second World War.
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What is fiscal headroom?
Potential budget cuts will be difficult, too, the IFS says – as living standards have been in a period of “record-long stagnation” and public services are “visibly struggling, and performing less well than they were back in 2010”.
But public services, except health, are to have an effective budget cut as funding isn’t being “sufficiently topped up”, the IFS said at the time of the autumn statement.
The thinktank says political parties need to “be honest with the public about the tough trade-offs they will inevitably have to make on tax and spending”.
“If they are promising tax cuts, let’s hear where the spending cuts will fall. If they are going to raise, or even protect, spending, they should tell us where taxes will rise,” IFS director Paul Johnson said.
“Or parties might think that further increases in government debt are justified: in which case they should make the argument for why debt should be rising.”
Crypto users betting on the outcome of the snap election to determine the next Prime Minister of Canada appear to be favoring a Liberal Party victory as residents head to cast their votes.
As of April 28, cryptocurrency betting platform Polymarket gave current Canadian Prime Minister and Liberal Party candidate Mark Carney a 79% chance of defeating Conservative Party candidate Pierre Poilievre in the race for the country’s next PM. Data from the platform showed users had poured more than $75 million into bets surrounding the race, predicting a Poilievre or Carney victory.
The odds suggested by the platform, as well as those from many polls, show a nearly complete reversal of fortunes between the two candidates after former Prime Minister Justin Trudeau resigned in January. Trudeau and, by association, many in the Liberal Party, faced criticism over the handling of Canada’s housing crisis and questions about how he would face US President Donald Trump’s then-proposed tariffs.
Following Trudeau’s resignation, Trump stepped up rhetoric disparaging Canada, repeatedly referring to the country as the US’s “51st state” and Trudeau as its “governor.” The US President also imposed a 25% tariff on goods imported from Canada in March. The policies seem to have led to increasing anti-Trump sentiment in Canada, with many residents booing the US national anthem at hockey games and making comparisons between the president and Poilievre.
This is a developing story, and further information will be added as it becomes available.
Politics
Small boat crossings pass 10,000 at earliest point in year since records began, Sky News understands
Small boat crossings have passed 10,000 in 2025 at the earliest point in a year since records began, Sky News understands.
Analysis of previous Home Office numbers and footage of people arriving today show the number of people crossing the Channel continuing to rise.
The issue has become a lodestone for political parties across the spectrum, with Rishi Sunak’s pledge to “Stop The Boats” falling well short.
Politics latest: PM warns of Tory-Reform pact ‘disaster’
Sir Keir Starmer promised to clear the backlog of asylum applications and “Smash The Gangs” of people smugglers upstream, but critics say he has failed to do this almost a year into his stint in Number Ten.
Reform’s Nigel Farage has made the issue key to his party’s pitch to voters.
The 10,000 figure is understood to have been passed on 28 April. Official figures only go until 27 April at the time of writing, with 9,885 people detected crossing the Channel by the UK government at this point
This compares to 7,167 by the same date in 2024, 5,745 in 2023, 5,352 in 2022, and 1,796 in 2021. Data only started to get collected in 2018, and for the first three years fewer than 1,000 people were observed crossing the Channel before 28 April.
Fine weather conditions are known to lead to an increase in people crossing the Channel, with some efforts earlier this year stymied by heavy winds.
Sir Keir scrapped the Conservative’s Rwanda deportation plan when entering office. In March, the prime minister said his government had “returned” 24,000 people who had no right to be in the UK.
Read more:
Why more people cross on the weekend?
Gusty conditions halt small boat crossings
Starmer: 24,000 people returned
Chris Philp, the shadow home secretary, said: “Britain’s borders are being torn apart under Labour. This year is already the worst on record for small boat crossings after over 10,000 illegal immigrants arrived in Britain, but Labour just sit on their hands.
“Labour scrapped our deterrent before it even started, flung open the door to extremists and criminals, and handed the bill to hardworking taxpayers.
“Under new Conservative leadership, we are serious about tackling this crisis with deliverable reforms, but Labour continue to block these at every turn. Labour’s open-door chaos is a betrayal of the British people, and we will not let them get away with it.”
Mr Philp was part of previous Conservative governments, which also failed to reduce crossings.
Speaking to broadcasters, Mr Farage said: “If this carries on at this rate, by the end of this Labour government another quarter of a million people will have come into this country, many of whom frankly don’t fit our culture or cost us a fortune.”
He claimed that Reform is “the only party” saying that “unless you deport those that come illegally, they will just continue to come”.
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A Home Office spokesperson said: “We all want to end dangerous small boat crossings, which threaten lives and undermine our border security.
“The people-smuggling gangs do not care if the vulnerable people they exploit live or die, as long as they pay and we will stop at nothing to dismantle their business models and bring them to justice.
“That is why this government has put together a serious plan to take down these networks at every stage.
“Through international intelligence sharing under our Border Security Command, enhanced enforcement operations in Northern France and tougher legislation in the Border Security and Asylum Bill, we are strengthening international partnerships and boosting our ability to identify, disrupt, and dismantle criminal gangs whilst strengthening the security of our borders.”
The Stacks Asia DLT Foundation has become the first Bitcoin-based organization to establish an official presence in the Middle East, aiming to promote institutional Bitcoin adoption through expanded educational initiatives.
Stacks Asia has partnered with the Abu Dhabi Global Market (ADGM) — one of the world’s fastest-growing financial centers — in a move that could boost the adoption of its Bitcoin (BTC) layer-2 (L2) solution in the Middle East and Asia.
The new partnership will play a “pivotal role” in shaping the future of Bitcoin’s “programmability and adoption” in these regions through educational programs and support for Bitcoin builders, according to an April 28 announcement shared with Cointelegraph.
Through the collaboration, Stacks and the ADGM aim to make it easier for institutions and investors to participate in the growing Bitcoin economy and help set “new standards for regulatory clarity and technical growth” for the rising global Bitcoin capital, according to Kyle Ellicott, executive director at Stacks Asia DLT Foundation.
Related: Crypto options desk QCP Capital wins Abu Dhabi license: Report
“Stacks and ADGM are a powerful combination for accelerating Bitcoin adoption across the Middle East and Asia,” Ellicott told Cointelegraph, adding:
“ADGM has established itself as a world-class global financial hub at the heart of the United Arab Emirates, known as the ‘Capitol of Capital,’ where capital and innovation are brought together to shape the future financial landscape.”
“We’ll be working to enable the launch of educational programs, regional developer communities, and create opportunities for the real-world adoption of Bitcoin-powered applications,” he said.
Starting in May, the foundation will host a series of live and virtual events to “empower institutions” with the knowledge to integrate Bitcoin into their operations and learn about the “opportunity of productive Bitcoin capital,” Ellicott added.
Related: Nomura crypto arm Laser Digital bags Abu Dhabi license
Stacks Foundation pushing for a “progressive” regulatory environment worldwide
As the leading Bitcoin scalability solution, Stacks is also pushing for progressive global regulations that will cement Bitcoin’s role in the future of the financial landscape.
“We’re not just focused locally — our team is engaged in global conversations, advocating for frameworks that balance decentralization, security, innovation, and compliance surrounding the unlocking of Bitcoin capital,” Ellicott said.
A key part of the strategy involves knowledge sharing with local regulatory bodies to build understanding among government officials about Bitcoin’s characteristics and potential economic impact.
The foundation is also developing the Bitcoin Capital Activation Framework, described as a comprehensive policy blueprint to help regulators enable Bitcoin utility in their jurisdictions.
The Stacks Foundation will also launch the Bitcoin Policy Bridge in May, a working group uniting regulators from all key jurisdictions across the Middle East and Asia.
In February, ADGM signed a memorandum of understanding with the Solana Foundation to advance the development of distributed ledger technology.
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