WATCH: Expert says that we should be 'very worried' about national debt

GB News

Tom Harwood has expressed alarm at the Office for Budget Responsibility's latest projections, which showed that UK national debt could soar to 270 per cent of GDP, stating it as "effective bankruptcy."The OBR's annual Fiscal Risks and Sustainability report, published today, warned that the UK's public finances are in a "relatively vulnerable position" following a series of economic shocks.Speaking about the bombshell report on GB News, host Emily Carver said: "National debt is projected to rise to 270 per cent of GDP by the early 2070s. It seems a long way off, but it’s not actually that far away."Director of the Centre for Policy Studies, Robert Colvile responded: "We should be very worried about this. I mean, this should be the main story on the news every single day that unless something is done, unless we change course, the country is in an unsustainable position. Essentially, we’re going to need either very big tax rises or very big spending cuts."READ THE FULL STORY HERE

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00:00National debt projected to rise to 270% of GDP by the early 2070s. Seems a long way off,

00:06but it's not actually that far away. Joining us now is Director at the Centre for Policy

00:09Studies, Robert Colville. Robert, how worried should we be about these projections?

00:14We should be very worried about them. I mean, this should be the main story on the news

00:18every single day, that unless something is done, unless we change path, the country is

00:23in an unsustainable position. Essentially, we're going to need either very big tax rises

00:28or very big spending cuts. I mean, this is the most extraordinary thing about it all.

00:33I mean, the central prediction is that debt is going to go from, well, it's near 100%

00:38of GDP now, that's bad enough, to 270% of GDP. But the report says that if productivity continues

00:46to grow at the sluggish pace that it's been growing at for the last couple of years, 270

00:51actually would be a massive underestimate. It could rise to 647% of GDP. I mean, is there

00:58every single country in the world that has debt at that level? I mean, that is effective

01:03bankruptcy? Yeah. We've been running the public finances essentially since the financial crisis

01:08on the basis that something will turn up, that somehow productivity growth will snap

01:12back into place, that living standards will rise again, that we'll go back to the world

01:16in the 90s and the 2000s and the 80s, that everything will turn out okay. And we're slowly accepting

01:25that it's not going to do that. I mean, the NHS alone, over the next 50 years, as the population

01:30ages, is set to double as the percentage of the national wealth it takes. As the report today

01:38says, the state pension with the triple lock is marching ever upwards. We saw just the other

01:42week. Welfare and incapacity spending meant to go up by £30 billion this parliament. Labour MPs

01:49couldn't even wring themselves to back something which would have taken £5 billion off that £30

01:52billion. Robert, how much of this is about the pandemic? Because the report also says that we're

01:57in a particularly vulnerable position for any shocks. So if there were, God forbid, something

02:01like that to happen again to the global economy, we'd be stuffed. Yeah. So the pandemic is a huge part

02:07of this. But it's accelerated a longer term story, which is that we haven't been, you know, the way

02:12you're meant to do this is you're meant to save during the good years to afford to be able to cope

02:15with things like the pandemic or the financial crisis. And what we've been doing is we've been

02:20splashing the cash when crises come along. But we haven't then been saving, we haven't then been

02:24going back and getting our budget back into surplus. I mean, from memory, I think the budget,

02:28the national budget has been in surplus four or five times in the last 50 years. So and since the

02:34pandemic, because of the huge amounts of money we spent and the economic impacts of that,

02:39essentially, we've been running the public finances on a sort of razor edge. The reason

02:43that everyone cares about the OBR now and cares about fiscal headroom is that the Chancellor,

02:47both Jeremy Hunt and Rachel Reeves and any other Chancellor, has been running the public

02:53finances really, really close to the edge. That is such a good point. I mean, if there was

02:59less of a large deficit, we wouldn't care what the OBR said. It wouldn't matter so much. Robert,

03:03just really quickly, in the mid 1970s, we had to go crawling to the IMF for a bailout. It was a

03:09humiliation for this country. And with it came conditions. I mean, is there any way out of this

03:14that doesn't mean that we could head towards the International Monetary Fund for some sort of third

03:20world bailout? I think the real danger is of a bond strike. It's of the guilt market. We are relying

03:27on the guilt markets to buy huge amounts of debt from our country every year. And the interest on

03:33that debt alone is going to cost us £100 billion every year for the rest of the Parliament. We are

03:38already in the top range of the amount we have to pay because the people selling that, buying that

03:43debt are a bit worried about our trajectory. If they go on strike, if they decide, you know what,

03:48we're not going to fund this anymore, we're going to jack up the price this country has to pay,

03:52then we will need to have very, very, as I said before, we will need to have very sharp taxes.

03:57Let's hope some tough decisions are made.

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