Britain’s debt burden means the nation has put itself by tax hell to run on the spot, says ALEX BRUMMER

There has been no fiscal statement since Rachel Reeves arrived at the Treasury which has failed to mention Liz Truss and the damage the former Tory Prime Minister caused to the public finances.

This might seem like good politics, but the Chancellor should be worried about throwing stones from glass houses.

Despite £75billion of confidence-sapping tax increases, the bond markets still have no faith in Britain’s fiscal credibility.

Indeed, the International Monetary Fund’s (IMF) fiscal monitor picks out Britain for special mention.

It pointedly notes that UK ten-year gilt yield climbed from 4.23 per cent on the eve of the Gulf War to 4.83 per cent on April Fool’s Day.

Other G7 advanced countries, including the US, Japan, France, and Italy, may have much worse debt-to-GDP ratios, but the UK sovereign debt is seen as most vulnerable to geopolitical crisis.

The UK has ladled on eye-popping tax increases to steady the public finances. The Chancellor might have expected to receive credit for her policies.

On paper they should have placed Britain in a good place to handle the stresses on the public finances because of the Gulf War.

But that doesn’t seem to be the case at all, which is why, thus far, the Chancellor has been so cautious about assistance.

Labour’s tax increases have been poorly designed. The employer National Insurance increase punished growth.

Money has been found for welfare, including the scrapping of the two-child benefit cap, but the priority of national defence has been neglected.

Robbing the development aid budget does not bring Britain close to meeting Nato targets.

There is comfort for the Chancellor from the Fund’s fiscal czars noting UK borrowing has been cut to 5.4 per cent of GDP or national output, driven by tax increases, tax threshold freezes and the expiry of the freeze on the fuel surcharge.

The IMF shows the British deficit shrinking in each of the next five years in contrast to many of its competitors.

That should be encouraging. But the improvement does little to change the size of the national debt, the nation’s accumulated borrowing, which remains above 100 per cent of output right through to 2031.

And, with Britain’s elevated borrowing costs, that means the nation has put itself through tax hell to run on the spot.

As the IMF’s managing director Kristalina Georgieva has noted, the cumulative impact of shock upon shock has pushed debt across the world to ‘dangerously high levels’.

She said that global public debt is on track to reach 100 per cent of GDP in 2029, a level not seen since the aftermath of the Second World War.

There is advice from the Fund for the UK and other countries about what to do to bring sovereign debt levels down from eye-watering levels.

Among the ideas floated is the removal of industrial subsidies.

In Britain’s case that might mean rethinking assistance for the steel industry, which is in line for a £1billion-plus green subvention. In a political gesture, the Government has also placed the railways back on the national balance sheet.

Another suggestion is to limit public sector pay bills. That isn’t a terrific message for a Labour government that caved in to public sector union demands and has steadily been increasing the size of the Government workforce as jobs in the wealth-creating private sector disappear.

The Chancellor’s commitment, delivered in Washington, to cut the energy bills of 10,000 British businesses by up to 25 per cent must be welcomed.

But waiting until 2027, when many companies may have sunk below the waves, is too late.

Gulf fillip

At least we should be assured that the war against Iran will have retreated into the distance by 2029.

The IMF and World Bank have revealed that they are planning to hold the annual meetings in October 2029 in Abu Dhabi in the United Arab Emirates.

This follows a vote by directors of both institutions. The last time the sessions were held in the UAE was in 2003, when they were in Dubai.

Bring your tin hats!