UK's Fiscal Outlook Is Becoming Increasingly Difficult

NatWest's latest Britonomics update argues that while the UK economy remains resilient, policymakers face increasingly difficult fiscal and monetary trade-offs amid geopolitical uncertainty, rising debt burdens and persistent inflation risks. 

• The Office for Budget Responsibility warns that UK public debt could climb from around 95% of GDP by 2030 to roughly 133% by the early 2050s without policy changes, driven by ageing demographics, weaker fuel tax revenues and rising debt-servicing costs. 
• The Bank of England continues to highlight resilience in the financial system but warns that elevated equity valuations, sovereign debt vulnerabilities and the rapid adoption of AI create new financial stability risks. 
• Labour market data point to a gradual slowdown rather than a sharp downturn, while the IMF expects global growth to remain supported by AI investment but constrained by geopolitical tensions and higher energy prices. 

Read the full report for the latest outlook on the UK economy, fiscal sustainability and global macro risks.