The UK’s national debt is projected to be higher in five years than now.
This is correct in terms of underlying debt, the measure the government uses in its target. The Office for Budget Responsibility forecasts that underlying debt will be 92.8% of GDP in 2028/29, compared to 89% in 2023/24.
Debt is forecast to be falling over the five-year fiscal forecast as a percentage of GDP.
This is true of underlying debt towards the end of the five year forecast period. Underlying debt as a percentage of GDP is forecast to increase every year between 2023/24 and 2026/27, and not begin falling until 2028/29.
“Laura Trott: One of our fiscal rules… is that debt needs to be falling over the five-year fiscal forecast as a percentage of GDP, which it is.
Evan Davis: No, it’s higher in five years than now.
Laura Trott: Not as a percentage of GDP.
Evan Davis: Yeah, no it’s higher. It’s going up, it’s lower in the fifth year relative to the fourth year, so it goes down at the end of the projection, but in five years, I think it’s higher—yeah, in 23/24 89% of GDP, 28/29 it’s 93% of GDP. Debt goes up, it falls at the end of five years a little bit—but that doesn’t mean debt is coming down, that means debt is going up. It’s higher in five years than now.
Laura Trott: It’s falling as a percentage of GDP.
Evan Davis: No, it’s higher as a percentage of GDP.”
An interview [46:00] yesterday between chief secretary to the Treasury Laura Trott MP and Radio 4’s PM presenter Evan Davis has been shared widely online, after Ms Trott appeared to claim Mr Davis was wrong to say debt is forecast to be higher in five years’ time than it is currently.
Mr Davis began by discussing Rishi Sunak’s pledge last year to ensure national debt is falling. Ms Trott then mentioned the government’s fiscal rules and following this they appeared to disagree over the debt forecast.
As shown in the transcript of their key exchange above, Mr Davis stated “debt is going up, it’s higher in five years than now”, to which Ms Trott responded “it’s falling as a percentage of GDP”.
Figures published in November by the Office for Budget Responsibility (OBR) show that underlying debt as a percentage of Gross Domestic Product (GDP) is forecast to be 89.0% this financial year (2023/24), and 92.8% in five years time (2028/29)—so 3.8 percentage points higher. (Underlying debt is the measure the government uses in its fiscal rules, which state that underlying debt must be falling as a percentage of GDP between the fourth and fifth year of the forecast period—it excludes the Bank of England’s debt.)
Mr Davis quoted these figures multiple times in the interview, but Ms Trott appeared to repeatedly suggest it was not correct to say debt will be higher in five years’ time as a percentage of GDP.
It’s possible that some confusion may have arisen from the fact that Ms Trott was initially referring to the fiscal rules mentioned above, while Mr Davis seems to have been referring to whether debt would be higher at the end of the forecast period than it is currently.
As was noted in the interview, OBR figures do show that underlying debt is forecast to begin falling at the end of the period—peaking at 93.2% in 2027/28 before falling to 92.8% the following year.
This means that the government is currently forecast to be meeting its fiscal target, even though debt will be higher in five years’ time than it is currently.
Politico’s Playbook newsletter also reports that the Treasury said Mr Davis was using the wrong debt figure. When we asked the Treasury what it meant by this, and about Ms Trott’s comments, we didn’t get an official statement, but it noted that there are different measures of public debt.
There are two main measures of national debt. While the government’s debt target focuses on ‘underlying’ public sector net debt, as outlined above, overall public sector net debt does include the Bank of England’s debt.
OBR figures do show that overall debt as a percentage of GDP is forecast to fall in five years, from 97.9% in 2023/24 to 94.1% in 2028/29. But it’s unclear why Ms Trott would have been referring to these figures given this is not the measure on which the government’s fiscal rules—which Ms Trott repeatedly mentioned during the interview—are based.
Statistics on their own have limitations. The way they are presented is a crucial part of how they are interpreted and understood by the public, and if data is presented without context or caveats, it can give an incomplete or misleading picture. Ministers must use statistics and data transparently and responsibly, with all relevant context and caveats.
Image courtesy of UK Parliament
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