The Resolution Foundation is warning the UK is on course for debt to rise to around 140 of economic output over the next 50 years.
The Bank of England should be given the power to cut interest rates into negative territory and take steps towards a higher inflation target to help future-proof the nation’s finances , according to a report
It is warning that higher interest rates are also cranking up the nation’s debt bill, with each one percentage point rise in rates adding around £15 billion to government borrowing in five years’ time. If rates slump back down in the event of lower growth, the pressures on debt could be even greater, according to the report.
But the inflation target should only be upped once the current 2% goal has been reached and if the UK returns to a low interest rate world, according to the report.
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