Welfare, debt and the NHS: Our public finances are on the road to ruin
Portugal is a fine country with plenty going for it, as an increasing number of Brits seem to be discovering. Just under 50,000 people moved there from the UK in 2023/34, up from 45,000 the previous year. These expats may or may not be aware that the country they’ve moved to (well-functioning, democratic, competitive and sunny) has a GDP equivalent to the amount their home country will soon spend on the NHS each year.
Portugal’s entire Gross Domestic Product – the value of all goods and services produced – is about £237bn. The UK is of course a much larger economy and a larger country, but following the recent Spending Review we now know that the state plans to spend £232bn, via the Department for Health and Social Care, in 2028/29.
I concede there are at least two possible reactions to this comparison; some people might think we’re blessed to live in a country that chooses to spend this sum of money on the provision of healthcare, whereas others might see it as staggeringly unsustainable and symptomatic of a nation in serious trouble. For those (like me) in the latter camp, a new briefing by the Centre for Policy Studies confirms our worst fears.
Following the Chancellor’s Spending Review their economists have crunched the numbers and concluded that the public sector will spend nearly £1.5 trillion by 2028/9, amounting to an eye-watering real-terms increase of 23 per cent on 2019/20.
The three biggest items in this shopping trolley are healthcare, welfare and servicing government debt. By the end of this parliament the government will be spending nearly £25,000 a year per adult. An extraordinary £6,000 of this will be on welfare. Debt interest alone will account for £2,000 per adult. If these figures aren’t frightening enough on their own, wait until they’re put into context. The size of the government is on course to grow by 23 per cent from the start of the 2020s to the end of the decade, over which time the rate of economic growth is expected to be 11 per cent. This points to a nightmare scenario where the state gets bigger as the country gets poorer.
The state is on course to hoover up more and more tax in order to spend more and more on welfare, healthcare and debt.
By the way, one-way flights to Portugal cost around £100.