The government would be wrong to use low interest rates to borrow and spend more
A new paper by the TaxPayers' Alliance sets out the economic landscape in which the Bank of England's Monetary Policy Committee (MPC) will make its latest interest rate decision, and makes the case for not raising borrowing or spending despite superficially alluring low interest rates.
- EVEN if interest rates remain at their historically low level of 0.25 per cent, then the national debt is projected to reach 234 per cent of GDP in 2066-67.
- However, it is very likely that rates will go up soon, and when they do, the national debt as a percentage of GDP is also projected to rise.
- By 2066-67, any increase in interest rates will mean a significant increase in the national debt as a percentage of GDP.