UK public finances in ‘vulnerable position' after Starmer's U-turns, OBR warns
The Office for Budget Responsibility (OBR) said Sir Keir Starmer 's U-turns on benefit cuts and winter fuel payments were driving the continued increase in government debt.
In a stark warning, the watchdog said debt would hit more than 270 per cent of the UK's entire economic output by the early 2070s.
The ever-expanding debt pile is causing a 'substantial erosion of the UK's capacity to respond to future shocks and growing pressures on the public finances', the OBR added.
Rachel Reeves is scrambling to fill a multi-billion pound black hole in the public finances ahead of her second Budget this autumn.
The chancellor will have to find an additional £5bn to plug the gap left by Sir Keir's climbdown on welfare reform, as well as more than £1bn to fund winter fuel payments for millions of pensioners after a previous U-turn.
The chancellor's headroom against her existing fiscal rules is also vulnerable to any downgrade since the OBR's last economic growth forecast, which looks likely amid the fallout from Donald Trump's global trade war.
In a report which will set alarm bells ringing in the Treasury, the OBR said: 'The UK's public finances have emerged from a series of major global economic shocks in a relatively vulnerable position.'
At the end of last year, government debt stood at 94 per cent of GDP, the sixth highest among the world's advanced economies, while the UK was facing the third-highest borrowing costs in the world.
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