Government debt will rise to 140% of GDP, think tank forecasts
- A leading think tank suggests that the Bank of England should raise its inflation target from 2% to 3% to provide more flexibility during economic downturns and ease the burden on public finances. This would allow for higher nominal interest rates and more room for rate cuts in the future.
- Government debt levels in the UK could potentially double to 190% of national income over the next 50 years without increased monetary policy flexibility, according to the report. The current debt ratio is nearly 100% of annual GDP.
- The report also highlights the rising cost of government borrowing, with each percentage point increase in the base interest rate adding approximately £15bn to the borrowing costs. If market expectations are correct, these costs could reach 5% of GDP.
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Leaning Left2Leaning Right0Center5Last Updated7 months agoBias Distribution71% Center
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