Public Spending Pressures in the UK: United Kingdom
Selected Issues Papers, July 24, 2024
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Bibliographic details
- Authors: Andrew Hodge
- Published: July 24, 2024
- Series: Selected Issues Papers
- DOI: https://doi.org/10.5089/9798400284397.018
Overview
- Paper characterizes UK public spending pressures over a ten-year horizon and their implications for public deficits and debt levels.
- Analysis based on a ‘bottom-up’ scenario for total public expenditure including implementation of the NHS Long-Term Workforce Plan, public investment to support the Balanced Pathway to Net Zero, and state pension spending under the Triple Lock policy.
- Scenario is approximately consistent with IMF staff’s baseline projection for the medium term (to FY2029/30) shown in the 2024 Article IV consultation staff report, which assumes real growth in Departmental Expenditure Limits (DEL) of two percent per year after FY2024/25.
Spending scenario and main assumptions
- Bottom-up scenario components include:
- Implementation of the NHS Long-Term Workforce Plan.
- Public investment to support the Balanced Pathway to Net Zero.
- State pension spending under the Triple Lock policy.
- Baseline assumption: real growth in Departmental Expenditure Limits (DEL) of two percent per year after FY2024/25.
- Revenue assumption: revenue stabilizes in FY2028/29 at the level projected by IMF staff (40.8 percent of GDP).
Key projections and fiscal implications
- Under the scenario and revenue assumption, public debt does not stabilize over ten years.
- Public debt projection: reaching 101.3 percent of GDP by FY2034/35.
Debt stabilization requirements
- To stabilize debt, the primary balance will need to be higher on average after FY2024/25 by:
- 0.8–1.4 ppts of GDP per year, depending on:
- the time horizon for stabilization (5 or 10 years), and
- the target probability of debt stabilization (50 or 75 percent).
Metadata and classification (from source)
- Author: Andrew Hodge
- Date: July 24, 2024
- Pages: 26
- Series: Selected Issues Paper No. 2024/029
- Issue: 029
- Volume: 2024
- DOI: https://doi.org/10.5089/9798400284397.018
- Stock No: SIPEA2024029
- ISBN: 9798400284397
- ISSN: 2958-7875
- Subjects: Capital spending, Education spending, Expenditure, Pension spending, Public debt
- Keywords: article IV consultation staff report, baseline projection, Capital spending, debt, Education spending, expenditure, fiscal policy, Global, Pension spending, public spending pressure, revenue, spending scenario, stabilizing debt, United Kingdom
Source: IMF — "Public Spending Pressures in the UK: United Kingdom" (Andrew Hodge, July 24, 2024), https://www.imf.org/en/publications/selected-issues-papers/issues/2024/07/24/public-spending-pressures-in-the-uk-united-kingdom-552418
Content in this bundle
- Sipea2024029