UK government spending set to outpace all G7 peers except Germany by 2030

The International Monetary Fund’s latest fiscal outlook indicates that the United Kingdom will see its government spending increase by 5.2 percentage points from 2019 levels, lifting the public sector’s share of GDP to 43.3% by 2030. This rate of growth surpasses all G7 nations except Germany, whose borrowing rules were recently relaxed for a massive defence programme. In contrast, the United States, France, Italy, Canada and Japan are forecast to expand their spending shares at slower rates, even though some already spend a larger portion of GDP than the UK.

The IMF also projects the UK’s tax revenue to reach roughly 41.9% of GDP by 2031, the steepest rise among peers, driven by higher taxes on businesses and households. Labour’s fiscal plan anticipates the deficit shrinking to -1.4% of GDP by 2031, making the UK the G7’s smallest deficit holder. IMF officials have cautioned the Treasury against further tax increases to fund defence, urging a discussion on spending cuts and the sustainability of debt-financed programmes.