The report claims the previous and current UK government’s aspirations to raise defence spending to 2.5% of GDP could add pressure to the public finances.
In addition, the cost of transitioning to net zero, battling extreme weather linked to climate change, and a falling birth rate could also lead to more spending and less revenue, it said.
The public finances are already under pressure due to “a succession of extraordinary shocks” over the past two decades, the report notes.
This includes the global financial crisis, the pandemic and the energy crisis.
Based on policy settings from March 2024, the analysis warns that public finances will be put on “an unsustainable path”.
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