Payments on UK debt burden to hit £548bn
Britain will be the most indebted of any major economy as the cost of servicing public debt reaches its highest level since World War II
Britain will be the most indebted of any major economy as the cost of servicing the government’s massive debt reaches its highest level since just after World War II.
In last week’s budget, Chancellor Jeremy Hunt said he would honor his budget rule of reducing debt within five years in proportion to the size of the economy – with £6.5bn left.
Tightening the purse strings: The total cost of paying the country’s £2.5 trillion mountain of debt will reach an eye-watering £548 billion by 2028
But the total cost of paying the country’s £2.5 trillion mountain of debt will reach an eye-watering £548 billion by 2028 – enough to fund healthcare for the next three years.
The interest bill is expected to peak at a whopping £115 billion this year, or more than £1,700 per person, according to the Office for Budget Responsibility (OBR).
Analysts say Britain’s debt burden is so high because more than a fifth of it is related to inflation – much higher than in other major economies.
The staggering figure is £5 billion lower than the November OBR forecast. But it’s still equivalent to 4.5 percent of annual production or 11.2 percent of sales — in both cases the highest since the late 1940s.
According to recent data from the European Commission, the amount spent on debt service will exceed that of Italy, the most indebted country in Europe, and much higher than that of the US or Japan.
“It’s an astonishingly high number,” says Stefan Koopman, senior macro strategist at investment bank Rabobank. “Having to put down that much to pay off the cost of existing debt will displace a lot of spending on public services and investment.”