Public investment in new technologies and the energy transition is “badly needed” to drive growth in the UK and prevent the national debt rising to risky levels, the International Monetary Fund (IMF) has warned.
Speaking as Rachel Reeves travelled to Washington to attend her first IMF annual meeting as chancellor, the body identified the UK as an advanced economy at risk of allowing borrowing to rise well in excess of pre-COVID levels.
The IMF’s annual fiscal monitor report, which assesses tax and spending plans across global economies, projects that UK net debt will increase from 91.6% of GDP this year to 96.4% by 2029.
Vitor Gaspar, director of fiscal affairs at the IMF, warned that the UK’s national debt level is “high, rising and risky”, but told Sky News that a combination of relatively high interest rates and low growth made public investment a priority.
Follow latest: Live politics updates
“If I were to give you my concern about the UK… I would put it as follows. The UK is living with interest rates close to US interest rates, but with growth rates that are not close to US levels.
“That leads to a theme that has been amply debated in the UK. Public investment as a percentage of GDP has been trending down and, given the challenges associated with the energy transition, new technologies, technological innovation and much else, public investment is badly needed.”
He warned that the UK’s challenge was not unique in a world where global debt has reached $100trn and rising.
“In most countries, fiscal plans that governments have put in place are insufficient to deliver stable or declining public debt ratios with a high degree of confidence. Additional efforts are necessary. Delaying adjustment is costly and risky. Kicking the can down the road won’t do. The time to act is now.”
Read more politics news
Starmer rejects calls for reparations
Health secretary to vote against assisted dying
Why row with Team Trump is awkward for Starmer
