Future generations of Britons are on track to see £1 in every £5 of taxes swallowed up by debt interest, according to a major new analysis of the dangers facing the national finances. Debt interest could account for over 21.3% of Government revenue by 2074-75 under the most likely scenario. In the worst case, it could hit 47%.
IPPR warning on debt burden
This has heightened fears that so-called “generation beta” – those born over the next 15 years – could inherit a crushing debt burden unless action is taken. The warning is likely to strike home in Andy Burnham’s Government because it comes from the Left-leaning Institute for Public Policy Research (IPPR).
The Government spent around £110billion on debt interest in 2025-26 – the equivalent of 8.1% of total public spending. The amount spent on debt interest has soared over the last decade and a half.
Political reactions
Shadow Chancellor Sir Mel Stride responded to the analysis with a pledge to cut benefits, saying: “Even Andy Burnham's favourite think tank says Labour are building up a mountain of debt to hand over to the next generation. Ministers refuse to get spending under control because they lack the backbone to face down their Left-wing backbenchers, who just want more money to spend on benefits. Burnham and Healey have no idea how to fix the mess other than to borrow even more than Starmer and Reeves did.”
Sir Mel said the Conservatives would “cut the deficit” and “cut welfare spending and get Britain working again”.
Meanwhile, Robert Jenrick – Nigel Farage’s choice to serve as chancellor in a Reform UK government – referred to an analysis of International Monetary Fund data, saying: “We have the second-fastest rising levels of debt of any country on the planet after Botswana. Burnham’s response has been to make a wish list of expensive spending schemes with no plan to pay for them. That means one of two things: even more borrowing – the interest on which is paid for by the taxpayer, or even more tax rises. It’s going to be working families that have to pay for all this.”
IPPR recommendations and Treasury response
The IPPR argues that “gradual reform can avoid these costs piling up over time and keep debt costs sustainable”. It claims that a “well-targeted package of reform and long-term investment – including action on preventive health, climate resilience and productivity – could significantly improve the outlook”.
The think tank states that “low growth and demographic pressures” are not the sole cause of the escalation in debt interest payments. It also blames the financial markets and a plan for the national finances which is “focused too strongly on narrow medium-term targets, and not enough on longer-term fiscal risks and opportunities”. Its new report argues there is a “world of difference between narrow, consistent and fully costed borrowing” and an “unbounded commitment to borrow more”.
A Treasury spokesperson said: “Fiscal discipline is the bedrock of economic stability and national security. The Chancellor and Prime Minister are in lockstep that the Government will meet the fiscal rules, with a buffer against uncertainty – and that includes getting debt down.”
