Institute for Fiscal Studies 31d ago

Britain’s public finances are under pressure. Public debt is high, borrowing remains high, and the government is spending far more on debt interest than in the past. Taxes are heading towards historic highs, while public services remain under strain and demand on the state continues to rise. In this episode, we set out the fiscal backdrop that will shape British politics over the coming years. Whoever is Prime Minister or Chancellor will face many of the same constraints: expensive borrowing, difficult spending choices and the need to get debt on a more sustainable path. Helen Miller is joined by IFS colleague Max Warner and Chris Giles, economics commentator at the Financial Times, to explain the state of the public finances, why borrowing costs matter, what the government’s fiscal rules do, how realistic current spending plans are, and whether there is any room for a future government to do things differently. Become a member: https://ifs.org.uk/individual-membership Find out more: https://ifs.org.uk/podcasts-explainers-and-calculators/podcasts 00:00 - Introduction 1:53 - Why do public finances matter? 2:40 - What is the deficit? 4:06 - What is happening to the deficit? 7:20 - Investment vs day-to-day spending 8:30 - What is happening to debt? 11:45 - The cost of debt interest 12:50 - The bond market 19:08 - The benefits of a balanced budget 20:28 - Interest rates 24:30 - Public service spending 27:30 - Defence spending 29:50 - The role of productivity 32:00 - The fiscal rules 38:05 - Is there fiscal space to pursue different policies? 40:14 - Spending plans 41:17 - The importance of growth 43:55 - The speed of change 45:47 - Conclusion