How worried should we be by the UK’s current public debt trajectory?
Monday 5 February 2024
At 3pm on Tuesday 6 February, the House of Lords Economic Affairs Committee will hear evidence from:
- Julian Jessop, Economics Fellow, Institute of Economic Affairs
- James Smith, Research Director, Resolution Foundation
- Danisha Kazi, Head of Economics, Positive Money.
This evidence session, which is open to the public, will be held in Committee Room 2 of the House of Lords. It will also be streamed live on Parliament TV.
Questions the committee is likely to ask in this session include:
- The Office for Budget Responsibility (OBR) told the committee that long-term debt sustainability requires action over the next Parliament. Over the medium term, what do you expect the Government to do?
- The OBR predicts a steady rise in the dependency ratio over the next few decades. Given the pressures this will place on public finances, what would be your recommendations to Government?
- Does the metric of debt as a percentage of GDP adequately capture sustainability of the national debt?
- What would you regard as a meaningful fiscal rule for the UK government to adopt when considering long-term fiscal stability?
- Does the taxation system in the UK require reform in order to promote sustainable trajectories of public debt?
- Given the objective of long-term debt sustainability, how important is it that the UK’s “productivity puzzle” is solved?
More about the How sustainable is our national debt? inquiry
UK public sector net debt, often referred to as ‘national debt’, currently stands at just under 100 per cent of GDP.
The UK’s growth outlook remains weak; quantitative easing has significantly increased the sensitivity of the UK’s debt to changes in short-term interest rates; and it is unclear whether the Government’s fiscal rule, as it relates to the national debt, is fit for purpose.
In December 2023 the committee published its call for evidence. The deadline for written submissions is Friday 9 February 2024.
The committee’s inquiry will investigate whether the UK’s national debt is on a sustainable path; if not, what steps are required; and whether the Government’s fiscal rule regarding the national debt is meaningful.
