Britain is spiraling into a dangerous “debt doom loop,” according to Ray Dalio, the billionaire founder of Bridgewater Associates, one of the world’s largest hedge funds. He cautioned that mounting debt, sluggish economic growth, and rising taxes are setting off alarming signals for the UK economy.
Dalio warned that government efforts to raise revenue through higher taxes could drive out wealthy individuals—those who contribute a significant share of tax income—triggering a negative economic cycle. He argued that this exodus could further strain the country’s finances.
His remarks come ahead of Chancellor Rachel Reeves’ expected Autumn Budget, in which she is anticipated to raise taxes and cut public spending to meet her fiscal targets. Analysts estimate she may face a budget shortfall of up to £30 billion.
Britain’s national debt currently stands at around £2.9 trillion and is projected to exceed £3 trillion within the next year.
Speaking on The Master Investor podcast, Dalio, 75, explained, “The debt loop is disrupting capital flows. When taxes are raised too aggressively, wealthy taxpayers leave—and that worsens the problem.”
He pointed out that, similar to the US, the UK’s top 10% of earners contribute around 75% of income tax revenue. “If even 5% of that group leaves, you could lose over a third of your tax income,” Dalio warned.
He further argued that worsening financial and social issues are prompting migration among affluent individuals globally. The solution, he believes, lies in strong, centrist leadership capable of bridging political divides and making tough, necessary decisions—comparable to the kind of leadership seen during World War II.
Dalio’s concerns mirror those of the International Monetary Fund (IMF), which recently cautioned that Reeves might need to either cut spending more drastically or reconsider her promise not to raise taxes on working people.
His comments also align with a recent statement by Richard Hughes, chair of the Office for Budget Responsibility (OBR), who told MPs that the UK’s increasing debt load is a serious concern. He warned that depending solely on higher taxes is unsustainable and highlighted how a series of chancellors have allowed the national debt to grow unchecked over time.
