2 days ago
Britain's debt is a threat to national security
Our sky high debt is a threat to our national security. This year, the cost of servicing our debt will be almost double what we are spending on defence. And in today's turbulent world, the fiscal buffer to cushion us from shocks is paper thin. The smallest tap could shatter our economic credibility.
The Prime Minister has made defence and security the organising principle of his government. Given that, putting our debt on a downward path should be his government's priority. It isn't. Debt will be higher at the end of the Parliament than today. And with global government debt already around $100 trillion, and Donald Trump about to increase that by a further $2.4 trillion, who will buy our debt – and at what price?
Last year, the cross-party House of Lords Economic Affairs Committee raised a red flag that UK debt risks becoming unsustainable unless tough decisions are taken in this Parliament. We set out a choice: taxes would have to rise, or the state would have to do less. Being cross-party, we did not opine on which option was best.
The Government has taken tough decisions – but in my mind the wrong ones. Taxes are rising to record highs. The Chancellor said last year that her strategy would deliver growth, and that she would not come back for more tax. But the growth forecast has been halved, and further tax hikes are on the cards. Meanwhile, pressure to spend more on defence is going to increase. At the upcoming Nato summit, nations are likely to be asked to commit to spending 5 per cent of GDP on defence – double Labour's current commitment.
So what is to be done? We need to confront the other option: the state should do less. The Government rightly says that the relentless rise in welfare spending is 'unsustainable'. Spending on disability and incapacity benefits alone is more than on defence. But having announced that action would be taken to curb the growth in the welfare budget, the Prime Minister is now blinking in the face of opposition.
The Government – and the nation – cannot afford ministers losing their nerve to keep a lid on spending. The bond vigilantes have saddled up and are on the prowl. Nor can the Chancellor tax her way out of the debt quagmire: to do so would risk us entering into a doom loop of ever lower growth and ever higher debt.
If defence and security is the organising principle of government, the Chancellor must set out a credible plan to stop debt's relentless rise and bring it down from today's giddying heights. Not doing so risks economic catastrophe – and our national security.
Lord Bridges of Headley is a former Government minister; he was Chairman of the House of Lords Economic Affairs Committee between January 2022 and January 2025
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