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The UK is bracing for substantial tax increases as the government faces growing pressure to stabilize its finances and fund future spending demands. A stark report from the Office for Budget Responsibility (OBR) warns that, without serious changes, national debt could soar to three times the size of the economy by 2075.
Economics editor Faisal Islam highlights that both short-term data—like weak growth in May—and long-term projections are contributing to a bleak fiscal picture. With debt, borrowing, and borrowing costs among the highest in advanced economies, the UK is in a vulnerable position if another crisis hits.
Chancellor Rachel Reeves has committed to not borrowing for day-to-day spending, aiming to reduce debt as a share of national income by 2029. But to meet those targets, experts believe the government will need to raise £10–£20 billion more in taxes.
While some changes—like freezing income tax thresholds—are already in place, they may not be enough. Attention is turning to wealth taxation, including property and inheritance tax, as a way to fund rising healthcare and social care costs without overburdening workers.
The state pension triple lock remains politically protected, but other welfare areas, such as disability payments, may see reform. At the same time, future increases in defence spending and local government support could force further tough decisions.
Despite the gloom, some economists remain optimistic. Lower interest rates and signs of economic resilience are boosting investor confidence. Global tech leaders have also praised the UK’s innovation potential.
Still, the message is clear: the UK will need to make hard fiscal choices in the years ahead—and higher taxes are likely part of the solution.
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