ANDREW NEIL: Our £3trillion national debt is a powder keg. One false move could ignite it. And I fear our new PM is out of his depth

By ANDREW NEIL, DAILY MAIL COLUMNIST Published: 01:01, 8 August 2026 | Updated: 01:28, 8 August 2026 This summer will go down in history as the first time ever that Britain’s national debt topped £3trillion. It’s a mind-boggling number, almost impossible to comprehend. So let me help you grasp the scale of it. It’s the equivalent of about £43,000 for every man, woman and child in the UK. Or about £105,000 for every household in the land. If it was denominated in £1 notes and you had to count them, it would take you 95,000 years at the rate of one a second. If it was stacked in £50 notes, the cash column would soar over 3,300 miles into space. I think you get the idea that it’s pretty huge. It’s also been growing like topsy. At the start of the century the national debt was a little over £330billion. In just 26 years it’s grown almost tenfold. It took British governments 300 years to accumulate £1trillion in debts, a totemic threshold we crossed in 2010. It took only ten years to add another trillion. We’ve managed to add a third trillion in under six years. Three big ticket events were arguably unavoidable. Bailing out the financial system and the economy after the Great Crash of 2008. Keeping people and business going during the pandemic. Handing out massive subsidies for fuel bills when energy prices spiked in the aftermath of Russia’s invasion of Ukraine. But profligate governments prepared to increase public spending, especially welfare, far faster than sluggish economic growth, only added to the scale of Britain’s debt mountain. Politicians of all political stripes must take the blame and none of them has had a clue how to reduce it. Even the years of so-called austerity during the earlier part of the last Tory government failed to put a dent in its relentless upward trajectory. Nary a day goes by without Andy Burnham indicating how much more he’d like to spend on social care, devolution, vocational education, health and welfare, writes Andrew Neil Unless Burnham and Chancellor John Healey are contemplating tax increases, none of this could be achieved without yet more borrowing, says Andrew Neil Now we’re all paying the price. It will cost over £110billion this financial year (2026-27) to service the national debt, the fourth biggest item of government spending after welfare, health and education. That works out at over £300million a day or £12million an hour – almost twice as much as we spend on defence. Unlike other items of public spending, which are the result of political decisions that can be altered, there’s nothing you can do about debt service charges: you have to pay them or you will end up in catastrophic default, something Britain has avoided since the Bank of England was founded in 1694. You might think that, by now, politicians would have learned their lesson and accepted the need to get a grip on all this borrowing. You’d be wrong. Official forecasts suggest the national debt will hit £3.5trillion by the start of the next decade, taking annual debt service charges to around £135billion. It’s a depressing prospect. But here’s the remarkable thing: British political discourse in government and on the Left generally, is currently dominated by a search for various ruses to borrow even more. There’s talk of separate war bonds to raise more for defence. And Left-wing think-tanks are obsessed with coming up with ever more ingenious ways of fiddling the fiscal rules to allow more borrowing. Even the Government is in on the act. This week it floated the idea of redefining how borrowing is measured to allow more debt to be issued to pay for £9billion of additional public investment by the end of the decade. This, we were assured, is just what is needed to kick-start the economy. In reality it’s a piddling amount (for a Government already spending almost £1.4trillion) and will have very little impact on economic growth. Not all public investment is good for growth anyway – just look at the billions Whitehall has squandered on HS2 or the hundreds of millions the Scottish government has wasted on two ferries. It’s also a huge risk for a country whose debts are already over 100 per cent (on the IMF measure) of its annual GDP. The bond markets, where the Government goes to borrow, are casting a wary eye over Britain’s precarious fiscal position. They already demand just shy of 5 per cent interest on ten-year gilts (as British sovereign bonds are called), the highest in the G7 club of major market economies. Even countries with bigger national debts than us, such as France and Italy, pay under 4 per cent on their bonds because they can count on the collective economic security of the Eurozone. America, whose $40trillion national debt passeth all human understanding, can get away with lower debt interest because it borrows in dollars, the global currency. International investors like to own dollar-denominated assets, like bonds issued by the US Treasury. Britain has neither a Eurozone nor a US dollar comfort blanket. It has to be especially alert to the mood of the bond markets, lest they start to dump British gilts or demand extortionate returns well above 5 per cent to buy new gilt issues, making the cost of debt service unsustainable. One wrong move – being too clever by half in fiddling the fiscal rules or yet more ramping up of growth-destroying taxes – and the wrath of the bond markets will come crashing down on our heads. I worry that our new Prime Minister and his novice Chancellor are out of their depth faced with all of this. I wonder if they even realise that the risks are all the greater because of the changing nature of who now holds our national debt. We used to borrow largely from our own pension funds and insurance companies. They had long-term liabilities well-matched by having reliable UK gilts as long-term assets. But Gordon Brown undermined the private pensions industry in his first (1997) Budget. Its need to hold UK gilts has withered on the vine. British gilts are now increasingly held by hedge funds, overseas investors and various other domestic and foreign financial institutions. Their outlook is far less long-term. They are more susceptible to short-term changes in price, speculation, confidence (or the loss of) and more lucrative investment opportunities elsewhere. In short, our national debt sits on a powder keg – which the UK Government could ignite with one false move. Yet nary a day goes by without Andy Burnham indicating how much more he’d like to spend on social care, devolution, vocational education, health and welfare, even defence. Unless he and Chancellor John Healey are contemplating tax increases which would put in the shade those that Rachel Reeves has already inflicted on us, none of this could be achieved without yet more borrowing on a massive scale. And then the whole house of cards would come tumbling down on us. Labour will borrow £650billion during the life of the current Parliament if it lasts that long. Yet growth is barely expected to be more than 1 per cent in any of its five years. I cannot fathom how anybody can think that if only we borrowed a bit more the economy would boom. The bond markets won’t wear it anyway. I don’t fear a repeat of the 1976 IMF bailout, when a Labour government was last in tax-borrow-spend mode because the circumstances are different today. But I am concerned about being stuck in a stagnant rut for as far as the eye can see, thanks to penal taxation, the state devouring an ever-increasing share of our national wealth while we endure the elevated borrowing costs required to pay for it. It is a dismal prospect. But I fear that’s where we’re heading. Even the thought of cutting public spending to slash taxes to unleash the country’s animal spirits, as happened in the 1980s and 90s, is beyond the pale. All that Burnham-Healey offer is more tax, more spend, more borrowing (if they can get away with it), and more stagnation. Who would have thought, a decade on from the Brexit referendum, that Britain would end up condemned to European-style sclerosis. Yet that looks like being Labour’s signal achievement.