UK risks fiscal abyss unless debt pile is tackled, think tanks warn

GEORGE Osborne must do more to address the threat to the UK’s recovery from its mounting public debt, according to warnings from two think tanks this morning.

As next week’s Autumn Statement looms, researchers are warning that a hike in interest rates would rapidly raise the cost of government borrowing, throwing the UK’s nascent recovery off track.

“A hint of economic growth will tempt all political parties towards expensive tax giveaways. Instead they should help the public understand that ever-increasing spending cannot be made available to them at little or no extra cost,” said Reform’s Andrew Haldenby.

Meanwhile the Policy Exchange warns that the UK faces a “fiscal abyss” unless the next government draws up a strong set of rules to tackle the national debt. To ensure that the Treasury sticks to a strict set of rules to reduce the UK’s debt to GDP ratio, the think tank wants nominal freezes to public sector pay, the state pension and benefit payments if targets are not met.