INTEREST payments on Britain’s huge debt pile will surge to £70bn in the next five years unless public spending is slashed, the Prime Minister warned yesterday.
David Cameron made the shock revelation as he sought to win public backing for the toughest spending cuts in a generation.
He was quoting from previously unpublished Treasury figures based on the 2010 Budget forecasts. The same figures put debt service costs at £31.5bn for 2009-10 and £42.5bn for 2010-11, 6.2 per cent and 7.9 per cent respectively.
The £70bn figure is equivalent to 10 per cent of total tax revenues, more than the government currently spends on English schools, climate change and transport combined.
Such a situation would make Britain one of the sickest men in Europe. According to the European Commission, Italy, Hungary and Greece are the only EU countries that will have interest payments equal to 10 per cent of tax take this year.
David Cameron said: “That is simply a staggering amount… Is this what people work so hard for, that their taxes are blown on interest payments on the national debt?”
The government released the figures as part of an orchestrated campaign to prepare the public for the biggest fiscal tightening since World War Two. Economists expect some departmental budgets to be slashed by as much as 25 per cent.
Chancellor George Osborne and Danny Alexander, his number two, will today announce plans for a massive public consultation that will see ministers visit town halls across the country to sell the austerity measures to wary voters.
A new website designed to encourage the public to give their views on where the axe should fall will also launch today.
Although Cameron warned the cuts would affect “our whole way of life”, he attempted to reassure voters with the Tories’ oft-repeated mantra “we are all in this together”.
“And I make this promise to everyone in Britain: you will not be left on your own in this. We will carry out Britain’s unavoidable deficit reduction plan in a way that strengthens and unites the country,” he said.
Michael Saunders, chief economist at Citigroup, said the Prime Minister wanted to prepare the public for a 22 June emergency Budget that will almost certainly usher in immediate tax rises while outlining the scale of fiscal consolidation that is required.