Britain's net public debt has climbed from 35% of GDP in 2005 to 95% today. The government is borrowing over 4% of GDP annually despite no emergency comparable to the financial crisis or pandemic that drove much of the earlier increase. The belt-tightening needed to stabilize debt levels amounts to about 2% of GDP. The Labour government holds a 157-seat majority in Parliament and has four years until the next election.

Britain spends about 6% of GDP supporting pensioners, an increase of over a third this century. Some 15% of the working-age population now claims jobless allowances following a surge in disability claims since the pandemic. Labour attempted to reduce spending on pensioners and welfare this year but reversed both reform plans after political outcry from within the party.

Tax revenue is already on course to reach 38% of GDP, a historical high for Britain. Labour promised before the election not to raise broad-based taxes on income and consumption. Four in five Britons say the government is mismanaging the economy. Yields on long-term government debt exceed those in any other major rich economy. The economy grew faster than any other G7 country in the first half of 2025, but the fiscal adjustment that would bring Britain to a primary surplus of less than 0.5% remains politically elusive.

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