OBR Warns UK Public Finances Vulnerable After Welfare U-Turns

The UK’s public finances are in a vulnerable and deteriorating state, according to the Office for Budget Responsibility (OBR). Successive governments, including the current Labour administration under Sir Keir Starmer and Chancellor Rachel Reeves, have reversed planned welfare reforms and reinstated winter fuel payments, contributing to rising debt and deficit levels. The UK now has the sixth-highest debt and third-highest borrowing costs among advanced economies, with debt projected to exceed 270% of GDP by the early 2070s. Additional pressures, such as rising pension costs due to an ageing population, increased defence spending commitments, and the economic impact of global tensions including President Trump's trade tariffs, further strain the fiscal outlook. The OBR highlights that government efforts to consolidate public finances have met only limited and temporary success, with public debt rising significantly over the past two decades. These challenges risk a substantial erosion of the UK's capacity to respond to future economic shocks and may necessitate further tax increases and spending adjustments.