Budget 2025 - National Debt Context For The Country and Highland

26th November 2025

UK debt is stabilising around 93-94% of GDP, but only just.

Borrowing is falling, yet debt interest costs (~£110bn a year) are eating into fiscal space.

The OBR says the Chancellor's fiscal rules are met marginally, meaning there's little room for surprises.

Implications for Rural Scotland
Council Budgets:

With debt interest swallowing a huge share of spending, central government is likely to squeeze local authority grants.

Highland Council, already stretched, will face tighter settlements and more pressure to raise revenue locally.

Infrastructure Investment:

Big-ticket projects (roads, ferries, rural broadband) risk delays or scaling back.

Priority will go to schemes that unlock growth or energy security — meaning renewables in Caithness and Sutherland may still attract funding.

Community Resilience:

Expect more emphasis on community benefit funds from wind and battery projects, as government leans on private developers to deliver local gains.

Councils may be nudged to co‑fund projects with industry rather than rely on Treasury cash.

Outlook
Likely Impact from Debt Outlook
Council services
Budget restraint, possible cuts or slower growth in funding
Rural infrastructure
Delays unless tied to energy or growth priorities
Energy projects Still favoured, seen as revenue generators
Community benefit
More reliance on developer funds to plug gaps
Long-term resilience
Councils expected to do more with less, leaning on local partnerships

For Caithness and the Highlands, the national debt squeeze translates into local belt‑tightening. The Treasury will prioritise projects that deliver national returns (energy, defence, growth corridors), while everyday rural infrastructure may be left to councils and communities to patch together.