There is also negative risk for the government’s fiscal and macroeconomic forecasts, there is a possibility that the Chancellor of the excarker may need to further adjust its policies in the upcoming autumn budget. Market expectations already reflect the possibility of additional tax measures, which can reduce the economy.
The ‘mutual’ American tariff announcements are determined for further weight on the UK’s open economy. 10% US tariffs on UK exports (on GBP 60BN exports to the United States last year or 2.1% of GDP) with 25% tariff on steel and aluminum since last month, the UK’s development forecast of the UK’s development of the UK from 1.0% for 2025 and 1.3% 1.3% for 2026.
The cost of borrowing has increased since last October: Higher interest expenses have effectively used all of the GBP 9.9BN fiscal headroom from the 2024 autumn budget. The scope rating (scope) estimates net interest payments after the general government has increased by 8.3% by 2029, which is a tripling from 3.1% at the ups of 2020.
High military expenses are estimated to increase public sector deficiency
Increase in NATO-usual expenditure of up to 2.5% of GDP by 2027 is a challenge for Britain’s fiscal stability. Although the increase in military expenditure of the UK is not as important as it has been announced by many other European governments, any further growth increases already high public sector deficiency. On the one hand, the political requirement, most of the current budget defense spending is classified as capital expenditure, so the financial year is not counted to the fiscal rules of the UK to balance the current budget by 2029-30.
The Chancellor is committed to reducing the public sector net financial liabilities. However, a more relevant market indicators: The net debt continues to increase except Bank of England. In view of the continuous output increase, high funding costs and significant expenditure requirements, Scope UK’s general government loans increase to 114.2% in GDP by 2029, which is an estimated 99.5% to end 2014 (Figure 1,
Figure 1. The attitude of debt-dumps is becoming more challenging