The UK is in a little financial trouble. Public-sector spending has already reached £1.2trn, or 48% of GDP. That’s another peacetime record. Total government debt is now more than 100% of GDP (up from below 30% before the global financial crisis). That wasn’t a particularly big deal last year. Low rates meant that interest payments were exceptionally low in 2022. Unfortunately that is about “to change dramatically”, says MacroStrategy’s James Ferguson. Firstly, because 28% of our outstanding debt is index-linked. That will raise interest rates by at least 2.5% of GDP this year.
At the same time, it2.5% of GDP to welfare costs. Not long now and government spending will make up a larger percentage of GDP than the private sector does.