Britain will have the biggest borrowing burden of any major economy as the cost of servicing the Government’s gargantuan debt hits its highest level since just after the Second World War.
In last week’s Budget, Chancellor Jeremy Hunt said he would meet his fiscal rule of having debt falling as a proportion of the size of economy in five years’ time – with £6.5 billion to spare.
Tightening the purse strings: The total cost of paying for the nation’s £2.5 trillion debt pile is set to hit an eye-watering £548 billion by 2028
But the total cost of paying for the nation’s £2.5 trillion debt pile is set to hit an eye-watering £548 billion by 2028 – enough to fund the next three years of healthcare.
The interest bill is expected to peak this year at a whopping £115 billion, or more than £1,700 per person, according to the Office for Budget Responsibility (OBR).
Analysts say the reason the UK’s debt bill is so high is because more than a fifth of it is linked to inflation – far higher than other major economies.
The staggering sum is £5 billion lower than the OBR forecast in November. But it is still equal to 4.5 per cent of annual output or 11.2 per cent of revenue – in both cases, the highest since the late 1940s.
It means the amount spent on debt servicing will soar above that of Italy, Europe’s most indebted nation, and will be far higher than that of the US or Japan, according to recent European Commission data.
‘It is an astonishingly high number,’ said Stefan Koopman, senior macro strategist at investment bank Rabobank. ‘Having to pony up that much to service the costs of existing debt is going to crowd out a lot of spending on public services and investment.’
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