In addition to existing issues, climate change and an aging population will push the UK’s debt to three times its current level.

The Office for Budget Responsibility (OBR) cites the costs of climate change, including the fiscal costs of completing the transition to net-zero while also coping with damage from rising temperatures and more severe weather, geopolitical tensions, and aging populations as leaving the UK to face an additional £40bn of tax rises or spending cuts every decade to avoid a “spiral” of public debt, or place it on an unsustainable path.

Over the next 50 years, public spending is projected to rise from 45 to over 60 per cent of GDP, while revenues remain at around 40 per cent of GDP. As a result, debt would rise rapidly from the late 2030s to 274 per cent of GDP in our baseline projection. On its baseline projection, to return debt to its pre-pandemic levels would require an average fiscal tightening of 1.5 per cent of GDP per decade over the next 50 year.

This rise in debt and need for fiscal adjustment might be partly alleviated through timely action to tackle these growing pressures and also by improvements in underlying economic conditions. Here, we will consider the climate factors.

The economic and fiscal risks posed by climate change fall into three broad categories: the mitigation costs involved in making the transition to net-zero; the costs of physical damage caused by higher temperatures, rising sea levels, and increasingly extreme and volatile weather; and the costs of adaptation to reduce that damage.

The OBR considers two basic scenarios: a global net-zero pathway where worldwide mitigation efforts are significantly strengthened, such that global net zero emissions is achieved (albeit around 2070, not 2050) and are projected to limit warming in 50 years' time to below 2C.

Or, a pathway associated with current global policies. That is the trajectory if the international community meets its current policy commitments. Under this pathway, emissions fall at an insufficient rate to reach net-zero. As a result, global temperatures increase by close to 3C by 2100.

In a scenario of temperatures rising below 3C, the direct costs would comprise of:

£260 million (0.009 per cent of GDP) to £370 million (0.013 per cent of GDP) for river and surface flooding.

£170 million (0.006 per cent of GDP) to £260 million (0.009 per cent of GDP) for coastal flooding.

£420 million (0.015 per cent of GDP) to £560 million (0.020 per cent of GDP) for heatwaves.

Which, with additional funding expenses, would mean an increase debt by around 33 per cent of GDP.

However, the OBR does note that speeding up net-zero could also help boost the economy by the middle of the century.

---