Fiscal

Public Finances

Debt

95% GDP (£2.9tn)

Interest

£111bn/year

Tax Burden

38.3% GDP (record)

Overview Full Research Analysis→ View in Graph

40%Current

Potential: 65%

✗Key Problems

1.Debt interest £111bn/yr - nearly tripled, 4th largest spend
2.Tax thresholds frozen since 2021 - 4m dragged into higher brackets, £45k treated as "high earner"
3.Tax burden 38.3% GDP - highest since WWII
4.Triple lock £15.5bn/yr - 3x estimate, untouchable

✓Solutions

1.EARNINGS-LINK ONLY: Replace triple lock, save £15.5bn/yr (pre-2011 norm)
2.EFFICIENCY TARGET: Return to 2019 staffing ratios, save £25bn/yr (Canada 1990s model)
3.FISCAL ANCHOR: Benefits growth capped at inflation until debt/GDP below 80%
4.EMPLOYER NI CUT: Reduce jobs tax to boost employment (Ireland model)

Analysis

Root Causes

Debt interest £111bn/yr - nearly tripled, 4th largest spend

Tax thresholds frozen since 2021 - 4m dragged into higher brackets, £45k treated as "high earner"

Tax burden 38.3% GDP - highest since WWII

Triple lock £15.5bn/yr - 3x estimate, untouchable

Reform Pathway

EARNINGS-LINK ONLY: Replace triple lock, save £15.5bn/yr (pre-2011 norm)

EFFICIENCY TARGET: Return to 2019 staffing ratios, save £25bn/yr (Canada 1990s model)

FISCAL ANCHOR: Benefits growth capped at inflation until debt/GDP below 80%

EMPLOYER NI CUT: Reduce jobs tax to boost employment (Ireland model)

Cascade Effects

Reforms in Public Finances will have downstream effects on 5 connected domains:

Infra→Health→Pensions→Justice→Tech/AI→

Read Full Research Analysis (Root Causes, Stakeholders, Evidence, Timeline)→

Policy Costings

Rigorous fiscal analysis of Public Finances reforms

View All Costings →

CONTESTED ESTIMATE

Significant methodological disputes. View caveats below.

Fiscal

Laffer Curve Tax Cuts

Upfront

£0m

Annual

-£45.0bn

Revenue

+£7.5bn

Net Annual Effect

-£37.5bn/year

GDP +2%Productivity +0.4%very high uncertainty

UNCERTAINTY RANGE (Annual Net Effect)

Most Pessimistic

-£60.0bn

⟷

Most Optimistic

-£20.0bn

MAJOR CAVEATS

•Static vs dynamic scoring contested: OBR uses static, but 2024-25 receipts below forecast after tax rises
•Laffer curve position uncertain: record millionaire exodus (UK now global leader) and non-dom flight suggest behavioural response stronger than models predict
•Elasticity assumptions vary widely: academic models (0.1-0.3) vs observed capital flight response
•International evidence mixed: Ireland corporate tax success, UK 50p rate underperformed, Kansas cuts failed (context-dependent)
•Transition costs real: static cost £40-50bn/yr requires offsetting measures or borrowing
•Counter-evidence: UK highest tax burden since 1948 correlates with stagnant growth, not revenue maximisation

4 sources