As Chancellor Rachel Reeves prepares the upcoming budget, familiar debates over welfare cuts, the triple lock on pensions, and tax increases dominate. Yet three enormous expenditures that have shaped the UK’s fiscal position remain largely unmentioned: COVID debt, energy support schemes, and Brexit. These were not unavoidable shocks but resulted from specific political choices, and the collective amnesia surrounding them prevents honest discussion about future crises.
The COVID-19 pandemic prompted unprecedented government intervention, with support measures totalling £169 billion (7% of GDP) between 2020 and 2022, mainly on the furlough scheme. This increased public debt from 80.4% of GDP in 2018 to 107.4% in 2021. While initially serviced at near-zero interest rates, higher rates now make debt interest spending larger than the education budget, driving Reeves’ determination to reduce debt levels.
When energy prices surged after Russia’s invasion of Ukraine, the UK chose to subsidise consumption rather than reduce demand, spending £78.2 billion (over 4% of GDP) on energy bill support – more than the European average. This approach avoided immediate fuel poverty but avoided difficult conversations about lifestyle changes needed for the energy transition, leaving taxpayers to bear the cost without addressing long-term decarbonisation goals.
Brexit has also faded from public debate, despite only 11% of adults viewing it as a success and 56% favouring rejoining the EU. The confusion is compounded by Reform UK’s Nigel Farage being touted as a future prime minister while being blamed for Brexit’s failures. The economic consequences of leaving the EU continue to constrain fiscal capacity, yet politicians and voters avoid confronting the trade-offs involved.
These three ghosts – COVID debt, energy support, and Brexit – have fundamentally weakened the UK’s fiscal position. Without reckoning with the decisions that led to them, the country risks repeating mistakes. Reeves’ budget must address these legacies, but the nation’s awkward amnesia may hinder the honest debate needed to chart a sustainable path forward.
