The cost of UK government borrowing may feel like a boring subject and not relevant to us as individuals, but one would be wrong on both counts . The finances of any government have a very material impact on all our lives, and the costs to borrow for any government that isn’t living within its means, has a major impact on those finances.  

Over the last few months, UK borrowing costs have risen sharply, increasing the cost of financing government debt to more than £100 billion a year - almost 10% of the annual budget.  To put this in perspective, our entire annual defence budget is £62 billion.

Many economists are warning the UK faces a unique strain on its financial position, caused by the government’s tax and spend policies, concurrent with projections that our aging society will place greater demand on public spending.  We have also (rightly) pledged to increase defence spending due to global threats.

The interest rate on the UK’s 30-year bond rose last week to 5.62%, which is almost a 27-year high.  To also put this in perspective, after the mini-budget during Liz Truss’ very short and disastrous time in office, the 30-year bond yield jumped to 5%, before falling back to about 3.5% after many of the mini-budget measures were reversed. Labour were relentless in the general election campaign, in saying that “the Conservatives crashed the economy” meaning the hike in borrowing costs, and yet now after a year of being in office, Labour are manging to make the days of Liz Truss look positively tame.    

This all puts the country in the same position as last year, dreading the upcoming autumn budget.  Between 30 to 50 billion pounds needs to be found in either more taxes, higher borrowing, or reduced spending.  The Chancellor has been boxed in by back-bench Labour MPs (including Crawley’s) who won’t allow her to slow down the future growth in the burgeoning welfare bill or reduce spending in any meaningful way.  Reducing spending is the best way but Labour won’t do it, leading to us being on the road to ruin.

Councillor Duncan Crow, Leader of Crawley Borough Council Conservative Group

3rd September 2025