By 2031, the interest payments alone on our national debt are forecast to reach £160 billion per year. Over the next six years, the taxpayer is projected to pay £850 billion just servicing the interest payments on said debt, much of this borrowed, further adding to our debt pile. It is set to reach £3.7 trillion over the same period.
The Conservatives had 14 years to sort Britain’s finances out while interest rates were at historically low levels. Instead, they recklessly wasted taxpayers’ money, taking the national debt from £1 trillion to £2.7 trillion. From Labour’s recent Budget, it is clear that they also have zero intention of taking any steps towards reining in the ballooning benefits bill, cutting foreign aid or stripping out waste from central government, as Reform has proposed.
To give an example of the scale of the failure: since 2010, Reform UK’s research suggests the Tories and Labour have spent £200 billion on foreign aid and £250 billion on benefits for foreign nationals and migrants – all completely discretionary spending.
Given that the government must continually refinance maturing gilts – many originally issued at considerably lower interest rates than today – using the current 10-year gilt (5% yield) as an illustration, that £450 billion of borrowing, when fully refinanced, would incur £22.5 billion in annual interest payments.
If those interest payments were themselves financed entirely through further borrowing at 5%, the debt attributable to that original £450 billion could grow to approximately £733 billion over ten years: generating an annual interest bill of approximately
£36.7 billion at the same rate.
We simply cannot continue to elect politicians who so recklessly waste taxpayers’ money. As the above illustrates, there are profound financial consequences in doing so, especially if we remain in a higher interest rate environment and compounding starts to take hold.
We either make material changes to our national debt by cutting government expenditure now, in an orderly manner, or it is likely that we will be forced by international bond markets to do so – in a profoundly more painful way – later.
Thomas Gargrave, Reform UK
