John Healey may be the only Labour politician who understands the danger of debt (Image: Getty)
If we’re not careful, it will soon be all we are thinking about. Because it lies at the heart of the crisis attacking us on so many fronts today. Britain just set a new and unwanted record as our national debt climbed above £3trillion for the first time. It’s a terrifying milestone, one that would have been unthinkable just a few decades ago. Now here’s the really terrifying bit. It took the UK 300 years for national debt to hit £1trillion in 2010. By 2020, it had doubled to £2trillion. The next trillion took us just six years. It’s on course to reach £4trillion within the next decade. Assuming everything hasn’t blown up by then. It might.
In 1990, when Margaret Thatcher stepped down, national debt was 28.3% of annual economic output, or GDP. When Gordon Brown was voted out in 2010 after the financial crisis, it had rocketed to 64.6%. Today, it’s nudging 100% of GDP. That increase mostly came under Conservative rule, although the pandemic hardly helped. During the coalition government, chancellor George Osborne tried to reduce the annual deficit, and was slammed for inflicting “austerity” on the nation. It was a funny sort of austerity. We still ran a deficit throughout.
The last time Britain recorded a budget surplus was in 2000/01, when Gordon Brown was still following spending limits inherited from the Tories. Then he opened the spigots, and Britain has run a deficit every year since. Labour is showing little sign of reversing that. In September alone, we borrowed another £21.2billion, despite rocketing HMRC revenues thanks to Labour’s tax blitz. We’re on course to add another £121billion to national debt this tax year. It may be more. Incredibly, Britain is not the worst offender. Our current budget deficit is 4.3% of GDP. In France, it’s 5.4%. In the US, around 6.2%. Neither country is showing much sign of doing anything about it.
Under Donald Trump, US national debt has reached a stunning $40trillion, equivalent to 123% of GDP. France is close behind at 119%. They make us look good. Almost. The French may riot at the drop of a hat, but debt is at the heart of their troubles. Every time the country hits the streets, politicians respond by throwing money at the protesters. Today, children are demanding more cash for their schools. In the past, they might have got it. Today, France doesn’t have the money.
Years of near-zero interest rates after the financial crisis allowed politicians to get away with this. Those days are over. Interest rates on French government debt have just topped 5%, the highest in a quarter of a century. The US gets away with its debt pile because the dollar is the world’s reserve currency and a safe haven in a crisis. But it can’t take privilege for granted forever.
As inflation rises, our borrowing costs will climb further. The UK government already spends £1 in every £10 on servicing debt. Last year, the interest bill cost us £109billion. Money we could have spent on the NHS, pensions, the military, roads, schools or tax cuts. We’re borrowing £4,000 every second.
Andy Burnham infamously said we “have to get over this thing about being in hock to the bond markets”. There’s only one way to do that. Stop borrowing so much. There are signs Chancellor John Healey gets it. He warned the Labour Party conference that the money isn’t there. Delegates didn’t want to hear. Britain is now living on borrowed time.
Across the left, phoney economists claim we should stop worrying about debt. Borrowing is fine so long as the money is invested. This is delusional. All they want is an excuse to spend even more, and pass the bill onto our children.
Healey’s Budget on Wednesday should focus on cutting spending, growing the economy and getting debt down. If he does that, gilt yields may fall. The Labour Party won’t like it, but fiscal discipline is no longer a luxury. It’s a matter of survival.
When Louis XVI was mired in debt, the French Revolution followed. The English Civil War could have been avoided if a heavily indebted King Charles I hadn’t kept tapping up Parliament for more cash.
When debt builds, heads roll. Healey needs to get on top of our debt pile, fast. Britain isn’t quite as profligate as the US and France. We need to keep it that way.
John Healey Must Do One Thing in the Budget – Or Britain Risks Following France
Britain is approaching a crucial moment for its public finances, and Chancellor John Healey faces a decision that could shape the country’s economic direction for years to come. With national debt exceeding £3 trillion, borrowing costs putting pressure on government spending and families continuing to struggle with the cost of living, the warning from critics is becoming increasingly difficult for ministers to ignore: Britain must get its finances under control before the choices become even more painful.
The central demand is clear. Healey must set out a credible plan to reduce borrowing, control day-to-day spending and strengthen the foundations of economic growth. Without such a plan, Britain could face some of the same difficult choices confronting France, where a large budget deficit and mounting debt have intensified arguments over taxes, public services and government spending.
The comparison does not mean that Britain and France are identical, nor does it suggest that a financial crisis is inevitable. However, it highlights a common problem facing governments across Europe: public expectations continue to rise even as the cost of financing those expectations becomes increasingly expensive.
For Healey and Prime Minister Andy Burnham, the challenge is to show that Britain can protect essential services, strengthen national security and help households without relying indefinitely on additional borrowing.
Britain’s Debt Problem Can No Longer Be Ignored
The scale of Britain’s public debt is one of the most significant challenges facing the Treasury. Government borrowing has accumulated over decades, with financial crises, the pandemic, higher public spending and the rising cost of servicing debt all contributing to the pressure.
According to reporting ahead of the October 2026 Budget, Britain’s national debt has passed £3 trillion. The amount the government owes is now close to the size of the country’s annual economic output, leaving public finances exposed to changes in interest rates and economic growth.
Debt itself is not automatically a problem. Governments can borrow to respond to emergencies, invest in infrastructure or support projects that improve productivity over the long term. The difficulty arises when borrowing remains high year after year and the government struggles to demonstrate how its finances will become sustainable.
When debt increases, the Treasury must devote more resources to interest payments. That money cannot simultaneously be spent on hospitals, schools, housing, transport or the armed forces.
The pressure becomes even greater when interest rates rise. Investors may demand higher returns to lend money to governments they consider financially vulnerable, increasing the cost of refinancing existing debt and funding new borrowing.
For ordinary households, the consequences can be indirect but significant. Higher government borrowing costs can contribute to higher mortgage rates, while expensive debt servicing can restrict the government’s ability to respond to future economic shocks.
This is why Healey’s Budget matters beyond Westminster. The decisions made by the Chancellor could affect the resources available for public services, the confidence of businesses and the financial choices facing families.
France Offers a Warning, Not a Guaranteed Future
France has become a prominent example in the debate over public debt because its government has struggled to bring its budget deficit under control while facing political resistance to spending reductions and tax increases.
The country has a long tradition of extensive public services and social protection. These arrangements provide important benefits, but they also require substantial and reliable funding.
When spending commitments consistently exceed government revenues, borrowing fills the gap. Over time, a larger debt burden can make the government more vulnerable to higher interest rates and leave less flexibility to respond to unexpected events.
French politicians have faced difficult decisions over pension arrangements, public spending and taxation. Attempts to change policies have triggered protests and political disputes, illustrating how difficult it can be to make fiscal adjustments when citizens believe their existing benefits are under threat.
The lesson for Britain is not that public services must automatically be cut or that every French policy has failed. Rather, governments need to explain honestly how their commitments will be paid for and what trade-offs are involved.
Britain has its own economic circumstances, institutions and political constraints. Its financial future will depend on domestic decisions as well as international conditions. Nevertheless, the French experience demonstrates that postponing difficult choices can leave governments with fewer attractive options later.
Healey must therefore avoid allowing temporary political convenience to replace a coherent long-term strategy.
The One Thing Healey Must Deliver: A Credible Plan to Control Borrowing
The most important task facing the Chancellor is to demonstrate that government borrowing can be brought under control without undermining the country’s ability to grow.
That requires more than announcing a single spending reduction or promising to eliminate waste. Healey needs a plan that identifies the government’s priorities, explains how they will be funded and establishes realistic expectations for future spending.
First, the government must distinguish between essential investment and routine expenditure. Investment that improves transport links, energy infrastructure, skills and technology can support future growth. However, such projects must be assessed carefully rather than automatically being treated as worthwhile simply because they are described as investment.
Second, government departments need realistic budgets. If ministers promise improvements in public services without providing sufficient funding, departments may struggle to deliver their objectives. Alternatively, additional spending may emerge later, putting further pressure on the public finances.
Third, the government must make its assumptions about economic growth credible. Higher productivity and stronger employment can increase tax revenues without requiring every additional pound to come from higher tax rates. But growth cannot be guaranteed through political announcements alone. Businesses need predictable rules, access to skilled workers, reliable infrastructure and confidence that future policy will not change unexpectedly.
Finally, Healey must provide transparent figures showing how the government intends to meet its fiscal rules. Investors and taxpayers need to understand not only the headline numbers, but also the assumptions behind them.
The Institute for Government has warned that Healey faces difficult decisions over spending plans, debt interest, defence commitments and the risk that inflation will erode the real value of departmental budgets. Its analysis underlines the importance of addressing those pressures rather than relying on optimistic forecasts.
A credible borrowing strategy would not eliminate every economic difficulty. It would, however, give households, businesses and financial markets a clearer understanding of the government’s direction.
Why Cutting Spending Is Not the Whole Answer
Calls for fiscal discipline often lead directly to demands for spending cuts. Yet the choice is more complicated than simply reducing the amount the government spends.
Cuts that damage essential services can create costs elsewhere. Reducing preventative healthcare, for example, may increase demand for more expensive treatment later. Failing to invest in infrastructure can constrain economic activity, while poorly designed reductions in local authority support may shift pressure onto emergency services.
The government must also consider the effect of spending decisions on vulnerable households. Pensioners, disabled people, low-income families and those relying on public services can be particularly exposed to changes in support.
At the same time, maintaining every existing programme regardless of its effectiveness is not a sustainable strategy. Ministers must be prepared to examine whether public money is delivering the intended results, remove duplication and reform systems that consistently fail to achieve their objectives.
The aim should be to spend more effectively, not simply to spend less.
Taxation presents another difficult question. Raising taxes can provide additional revenue, but excessive or poorly designed increases may discourage investment, affect hiring decisions or leave households with less disposable income. The government must also consider its manifesto commitments and the consequences of breaking them.
Healey’s task is therefore to find a credible balance between expenditure, taxation and growth. There is no painless solution, but avoiding clear choices would make the eventual adjustments more difficult.
Defence Spending Adds Another Layer of Pressure
Britain’s financial challenges are not limited to domestic services. National defence has become a major issue as the government faces pressure to strengthen military readiness and meet its commitments to NATO.
Healey previously served as defence secretary before leaving the role following disagreements over the resources available for defence. That background makes the funding arrangements in his first Budget particularly significant.
Prime Minister Burnham has said the government will set out a plan to fund existing defence commitments and establish a path towards higher defence spending. Reuters reported ahead of the Budget that the government intended to address targets of 3 per cent of gross domestic product by 2030 and 3.5 per cent by 2035 for core defence requirements, within the wider NATO spending framework.
Achieving those ambitions will require substantial resources. The government must explain how it intends to fund the commitments without placing unrealistic demands on other departments or relying on borrowing that undermines its fiscal objectives.
Defence spending also has a long planning horizon. Equipment programmes, military personnel and readiness cannot always be expanded or reduced quickly without consequences. Uncertainty over future budgets can make it harder for the armed forces and defence companies to plan.
This creates a difficult choice for Healey. Britain must consider its security obligations while recognising that every additional commitment has a financial cost.
A clear funding plan would help show how the government intends to balance those priorities with its domestic promises.
Families Will Judge the Budget by Its Results
Although debt figures and bond yields dominate financial discussions, most households will judge the Budget by whether it changes their daily lives.
Families want affordable energy, stable employment, accessible healthcare and a reasonable chance of improving their living standards. Businesses want confidence to invest and recruit. Public sector workers want to know whether the services they provide will have the resources required to function effectively.
These expectations are understandable, but they cannot all be met immediately without considering the money available.
The government must also recognise that fiscal discipline does not automatically guarantee stronger living standards. If economic growth remains weak, wages stagnate and essential costs continue to rise, households may see little benefit from improvements in the public finances.
That is why the Budget needs to connect debt reduction with a practical economic strategy. Controlling borrowing should create greater resilience, while investment and reform should help improve productivity and expand the resources available to the country over time.
For Burnham, the political challenge is to demonstrate that financial restraint can support his broader objectives rather than simply delaying them. For Healey, the responsibility is to show that the government’s promises have been matched with realistic financial plans.
A Defining Test for Britain
The warning that Britain could end up like France reflects a wider concern about what happens when governments allow debt and spending commitments to grow without a convincing plan for long-term sustainability.
France’s difficulties do not prove that Britain is destined to follow the same path. Economic outcomes depend on many factors, including productivity, interest rates, political decisions and international developments. Britain still has choices available, but those choices become more constrained as debt interest consumes a greater share of public resources.
Healey’s Budget must therefore do more than provide short-term reassurance. It needs to explain how the government will control borrowing, improve the effectiveness of public spending, support sustainable growth and finance its defence commitments.
That approach may require difficult decisions, and not every decision will satisfy every voter. However, the alternative—continuing to make commitments without a convincing explanation of how they will be funded—risks leaving future governments with an even narrower range of options.
Ultimately, the central question is whether Britain can protect the services people depend on while putting its public finances on a more sustainable footing.
The answer will not be determined by one Budget alone. It will depend on whether Healey and Burnham follow through on their commitments in the years ahead, making difficult choices transparently and adjusting their plans when economic conditions change.
Britain does not have to repeat France’s experience. But avoiding similar pressures will require more than warnings about the dangers of debt. It will require a credible plan, consistent decisions and evidence that public money is being used to deliver lasting benefits for the country.