Ruth Gregory, deputy chief UK economist at the consultancy Capital Economics, says that with public debt equivalent to 96 per cent of GDP and interest rate rises, the chancellor is walking a tightrope.
“The UK’s fraught position means significantly raising borrowing is not really an option, and that any further rises in government spending will probably need to be funded by higher taxes.
“That said, taxes as a share of GDP are already set to rise to an all-time high of just over 38 per cent by 2029-30 — 5 per cent above pre-pandemic levels.”