Brits pay highest tax burden in 75 years
Key Points
- Weak growth, ageing and ill health cost Britain around £330 billion a year, the Resolution Foundation finds
- The UK tax-to-GDP ratio hit a 75 year high in 2025-26, raising an extra £90 billion since 2007-08
- Day-to-day public services spending sits nearly £140 billion below its pre-financial-crisis path
- Public sector net debt has almost trebled since 2007-08
- The Foundation says the incoming Chancellor has roughly £10 billion of headroom against the fiscal rules
British taxpayers now shoulder the heaviest tax burden in 75 years while receiving nearly £140 billion less in day-to-day public services than the pre-2008 trend implied, according to new research from the Resolution Foundation.
The think tank’s report, The Great Escape, finds that a triple whammy of weak growth, an ageing population and rising ill health since 2007 costs Britain around £330 billion a year. Households pay for this through higher taxes, weaker public services and more government borrowing.
Weak growth accounts for the largest share of the damage. The slowdown in GDP per person since the financial crisis has cut tax revenues by around £450 billion a year, though stagnant private sector wages enabled an offsetting squeeze on public sector pay and welfare benefits. This leaves the net hit from weak growth at roughly £240 billion a year.
An ageing population adds another £50 billion to the bill. Rising ill health beyond the effects of ageing costs a further £40 billion, with the share of the population in poor health up four percentage points since 2007-08. Ageing explains only one fifth of that rise.
How households pay the price
The tax-to-GDP ratio reached a 75 year high in 2025-26, with increases since 2007-08 boosting receipts by £90 billion a year. Over the same period, public sector net debt almost trebled while day-to-day public services spending fell nearly £140 billion below its pre-crisis path.
Simon Pittaway, Senior Economist at the Resolution Foundation, said the three hits are “being paid for by more borrowing, the highest tax burden in 75 years, and huge cuts to public services”.
“Britain needs to break out of its fiscal funk and get the public finances back on a sustainable path. Otherwise the choices over which taxes to raise, which public services to ration and how much more we spend on servicing our debt will get even more painful,” he said.
What the new government must do
The Foundation argues that a new Prime Minister and Chancellor offer the perfect opportunity to change course. Its long-run modelling suggests that running a current budget balance on average would keep debt gently falling over the next 30 years, a target the Government has already adopted but not yet delivered.
The report specifically calls for an end to clearly unsustainable policies. It singles out the pensions Triple Lock, which costs £12.6 billion more in 2026-27 than a straight earnings link, and recommends replacing it with a smoothed earnings link.
The researchers also warn that the incoming Chancellor starts from a position of weakness.
War in the Middle East has likely cut headroom against the fiscal rules from £23.6 billion at the Spring Forecast to just £10 billion today, meaning any new spending commitments will need full funding.
Pittaway said the new leadership must “level with the public that popular policies like the Triple Lock ratchet are simply unaffordable” and be honest that “everyone needs to pay their part through a more efficient, broad-based tax system”.
