The real story behind the Spring Statement

Let me start with a full, open and honest disclaimer: I am not an economist. I did study a course in my second year of university of the history of economics. But my lecture attendance record was patchy at best and I only took the course because my twin brother was on it. I though it would be fun to be on the same course together. Turns out it was the opposite of fun. He was vastly better at it than me. On one especially tragic occasion, I went to pick up ‘my’ essay and saw I had an outstanding score. I’ve finally cracked university, I thought to myself, only to double check which twin had actually written the essay…. I’ll leave you to finish the story.

So I am no expert in micro or macro economics. But the big political story this week is the Spring Statement which means I both have to and indeed want to write on it. The big question is how do you find a fresh angle from a Christian perspective? What would be useful and serve you, our amazing readers?

Let’s start with the facts.

Chancellor Rachel Reeves announced a series of changes to health-related universal credit in particular. From April 2026, the level for new claimants was already due to fall from £97 to £50 and in addition, this will not rise with inflation until after 2030. Existing claimants of the health-related payments will be frozen at £97 per week until 2030.

There will also be stricter eligibility tests for personal independence payments from November 2026. This measure in particular has drawn the ire of disability groups and for good reason. It will disproportionately impact those living with a long term disability.

Housebuilding has received a major boost with 170,000 new homes expected to be built over the next five years. The goal is also still to cover day-to-day expenditure by 2030.

There was also a boost for defence spending which is a down payment before we reach 2.5% of GDP of defence by 2027.

So what do I think about the Statement? I must admit I didn’t watch it and have relied on clips on social media and the BBC website to catch-up. My one big observation is apart from the ethical questions raised by cutting health benefits, this Spring Statement did not actually do very much and feel like a lot of tinkering around the edges.

What Reeves did not talk about in any proper detail is the sheer scale of our national debt. To me, this is the real story behind the Spring Statement. Our national debt is a staggering £2.8 trillion. Just let that number sink in for a moment. It is so large, I find it impossible to get my head round it. The level of national debt is basically the same as the value of all the goods and services the UK produces in a year.

Surely, though, most developed nations have similar levels of national debt, so what is the issue? This is true: the UK is not alone and indeed, out of the G7, the UK is in the middle in terms of the size and scale of our national debt compared to say, the US, where the situation is far worse.

But what we must grasp is that the larger the national debt, the more interest the government pays. So it is a double whammy. In December 2024, the Government had to pay £8.3 billion in interest on its borrowing. While a much smaller sum than £2.8 trillion, it is still eye-wateringly high!

This is billions of pounds the government is not spending on public services, on supporting the most vulnerable in our communities, on schools or on building new hospitals and fixing existing ones.

All of this also means we have not had a balanced budget for years. Did you know the last time the UK had a budget surplus (where we bring in more money than we spend)? It was in 2000/01. But since 1970, we have had a budget surplus just five times.

Over that time period, the size of the state has got bigger and bigger as the public sector has grown. The British people now expect a certain level from public services and they are swallowing up more and more money. Consider for example the National Health Service. Over the past 50 years, UK health expenditure has increased significantly, rising from around £36 billion in 1972/73 to £212 billion in 2022/23

The cost of everything is far greater than the amount the government brings in via taxation. So they face a choice: do you increase taxes? This is very unpopular and politically unpalatable. Political parties often promise not to do this in elections and tie their hands for the next parliament. Another option is you cut public spending. But again, this is deeply unpopular and the word ‘austerity’ gets used as a deeply negative slur.

The only other option for governments who want to maintain the level of public services people have got used to is to borrow to cover the gap between expenditure and income. The West has been hooked on borrowing because for years, interest rates on borrowing were very low. But while interest rates are now much higher, the addiction to borrowing remains.

So, I think our national debt is far too high. I think the attitude that says ‘this is how capitalism works and it will all sort itself out’ is far too laissez-faire.

But my real problem with the scale of our national debt is that it is creating a colossal intergenerational injustice. In other words, we might not have to suffer the consequences of a future government increasing taxes or cutting spending to balance the books, but we are heaping up an ever increasing pile of national debt for future generations to suffer from.

There are two possible responses to this. We could be like King Hezekiah. In Isaiah 39, we have the account of envoys from Babylon coming to view the Temple in Jerusalem and all the wealth of the nation. Isaiah the prophet goes to King Hezekiah afterwards and warns him that everything in his palace will be carried of to Babylon in the future. Isaiah 39:8 record the King’s response: “The word of the Lord you have spoken is good, Hezekiah replied. For he thought, there will be peace and security in my lifetime.”

Although some argue this text is ambiguous I do not think there is anything unclear about it. Hezekiah selfishly thinks there is nothing for him to worry about because the plundering of the nation’s valuables will happen when he is long gone. I do not think this is a Christian response! It is the very opposite of Jesus who is the servant-King and who taught us that it is more blessed to give than to receive.

But there is another response and that is to look afresh at what the Bible teaches about borrowing and lending and see if there are principles we can apply.

The very concept of national debt only really became a thing in the seventeenth century when the Netherlands and then the British state borrowed for the first time as a ‘corporate’ entity.

So there is no biblical material that directly relates to government or national debt. But we do have are principles to do with borrowing and lending. Although these principles are largely drawn from Old Testament law, we must remember that Israel was supposed to be a light for other nations. In other words, the law points us to God’s character and this does not change and therefore they reveal principles that have an abiding relevance.

Drawing out the right principles is one thing, properly applying them to government debt is another and we must tread very carefully. What follows is heavily informed by Dr Paul Mills, who graduated in economics from Cambridge University.

Biblical principles

Firstly, debts are promises to be honoured. We see this in Psalm 37:21 “The wicked borrow and do not repay, but the righteous give generously;”

Borrowing means a solemn commitment to give it back. So what is our government’s plan to do this? At the moment we are simply paying back the interest only.

Secondly, borrowing places a financial bondage on the debtor. Proverbs 22:7 says “The rich rule over the poor, and the borrower is slave to the lender.”

If you borrow and fail to pay back, you place yourself at risk of future loss of freedom. In our case, if national debt is left unsolved, at some point you would think there would be a reckoning. Future generations may lose access to the sort of pension provision we have enjoyed or the level of public services because of a need to balance the books.

Thirdly, long term debt did not exist in the Bible. This is because periodically, debts are cancelled. Deuteronomy 15:1-6 says “ At the end of every seven years you must cancel debts. ² This is how it is to be done: Every creditor shall cancel any loan they have made to a fellow Israelite. They shall not require payment from anyone among their own people, because the Lord’s time for cancelling debts has been proclaimed. ³ You may require payment from a foreigner, but you must cancel any debt your fellow Israelite owes you. ⁴ However, there need be no poor people among you, for in the land the Lord your God is giving you to possess as your inheritance, he will richly bless you, ⁵ if only you fully obey the Lord your God and are careful to follow all these commands I am giving you today. ⁶ For the Lord your God will bless you as he has promised, and you will lend to many nations but will borrow from none. You will rule over many nations but none will rule over you.”

It seems highly improbably the market would ever cancel UK government debt! So what does it look like to uphold this principle today in terms of government debt?

Fourthly, in the Bible, interest could not be charged on debts within the Old Testament Israelite community. Deuteronomy 23:19 says “Do not charge a fellow Israelite interest, whether on money or food or anything else that may earn interest.” Currently the UK government is spending billions of pounds per month in interest on its borrowing.

The final key principle we will draw out is the role God has given to governments. Romans 13:1-7 makes it clear governments are appointed by God to uphold good and punish evil. God’s purpose for his image-bearers is that we might steward the world around us (Genesis 1:28) for the benefit of future generations (Genesis 2:15).

Good government stewards the economy well with a view on future generations, ensuring their existence is improved, rather than saddling them with mountains of debt repayments.

Applications

In his Cambridge Paper on government debt, Dr Paul Mills argues the government should adopt formal legislative commitments to reduce the debt-GDP ratio and to its credit, this is essentially part of the government’s current fiscal rules. The problem is it is most likely to be changed or adapted if the government looks set to miss its target.

Dr Mills also argues that if government debt is to be issued it should be short-term and interest free. He says “Modern payment systems and current accounts are difficult to operate without some form of secure and liquid asset being available from a central bank or Treasury. Keeping any such borrowing short-term minimises both the temptation for government to accommodate inflation and any potential loss of political independence to placate long-term creditors.”

He goes on to warn “The public debt crisis now faced by most Western nations is a ‘slow-burn’ problem that, unless tackled, will force governments to resort to draconian spending cuts, wealth confiscation, default or inflation. Christians have a unique message to address the underlying ‘heart’ issue of intergenerational selfishness through the gospel, while practical policy suggestions can be derived from the Bible’s teaching on debt to promote justice for both current and future citizens.”

At the very least, the Biblical principles above point to the fact we have strayed far from God's better story for borrowing. The Bible is so beautifully balanced. Borrowing is allowed, but there were mechanisms built in to protect citizens from interest, with clear rules around paying debt back.

What we need in the UK is a government and political leaders with the courage to take genuine long-term decisions to bring down our national debt and to ensure we are now passing the burden on to future generations.

As ever, God's wisdom on debt, borrowing, money, wealth and interest holds the key to a fairer, more moral and equitable approach to national debt. The question is whether our political class is ready and willing to listen.