There is an ominous sense in the air in Britain — a sense that the country is headed toward the rocks and that the captain has no idea how to steer the ship. This feeling is vague — hardly the stuff of graphs or numbers — but vague feelings can sometimes tell us more about the future than the hardest economic statistics.

The two biggest rocks on the horizon are labeled debt crisis and civil unrest. Blood-curdling warnings from the right are par for the course. Andrew Neil warns in the Daily Mail that “broke Britain is on the edge of financial disaster … I’m scared for what’s to come.”

But equally dire warnings are coming from the left — and even from the very heart of government. Gary Smith, the general secretary of the GMB union, notes that “our finances are precarious … this could unravel very quickly.” Deputy Prime Minister Angela Rayner has told her boss that Britain could face a repeat of last year’s summer riots unless “the government shows it can address people’s concerns.” Seven in 10 Britons think that it’s likely the country will experience race riots in the future, according to a poll for The Economist.

Why are the British in such a state of angst? And, more importantly, are they right to be so worried?

The country’s economic problems stem from a combination of rising debt and dismal growth. The Office for Budget Responsibility recently warned of Britain’s “relatively vulnerable” position, with the sixth-highest debt among 36 advanced economies, the fifth-highest deficit and the third-highest borrowing costs. The government recorded the second-highest June borrowing figure since records began in 1993 (and that was only exceeded by June 2020 when COVID was raging).

Bond markets have traditionally given a lot of leeway to Britain because of its reputation for seriousness. They also give leeway to governments that have a large majority and a clear plan for dealing with their debt.

But Starmer’s Labour looks more like a divided minority government on its last legs than a one-year-old government with a huge majority. It failed to pass a modest package of welfare reforms that would raise £1.5 billion ($2 billion) from means-testing winter fuel payments and £5 billion from cutting health and disability benefits, when public spending stands at £1.3 trillion a year.

The government’s promise that it will grow its way out of its fiscal hole has evaporated, with Chancellor of the Exchequer Rachel Reeves instead digging deeper by increasing taxes on labor and driving away wealthy people (particularly non-doms) who pay a disproportionate share of taxes.

The last fortnight has seen a couple of tense street protests — in Epping and Canary Wharf. In both cases, locals protested the government’s decision to take over local hotels and fill them with young male asylum seekers, chanting “send them home” and “save our kids.” The protests quickly gained national resonance: Organized agitators from both the left and the right came in from across the country, and the internet lit up with furious posts.

We have no equivalent of the OBR to give a balanced assessment of the state of the country’s social fabric, but a bipartisan report by Sajid Javid, a former Conservative home secretary, and John Cruddas, a Labour grandee, published by the think tank British Future, makes for sobering reading: The authors warn that Britain is sitting on a “powder keg” of social tensions that could easily ignite again. The social bonds that have traditionally held society together have been fraying for decades, they say, but the tensions have been significantly increased by rapid immigration and poor assimilation.

Trust in politicians is at an all-time low with 45% of people in the 2024 British Social Attitudes Survey saying they “almost never” trust governments of any party to put the needs of the nation above the interests of their own political party, up by 22 percentage points from 2020.

I think it is still more likely than not that Britain will muddle through without either a debt crisis or a major series of riots, let alone a civil war, as one academic, David Betz, a professor of war studies at King’s College, London, has predicted. Reeves has the option of breaking her electoral promise and raising general taxation. The government is, finally, giving the impression that it is taking the small boats crisis seriously by targeting the international gangs that profit from people smuggling and cracking down on the food delivery services that profit from illegal labor. What we are probably in for instead is prolonged pain rather than sudden crisis.

But a major shock cannot be ruled out. The most serious worry is that the barriers that protect us from either a debt contagion or a social conflagration have been eroded. Britain’s credit with the global markets is not what it was since the Liz Truss fiasco. And many people’s trust in the establishment has been weakened by that establishment’s failure to control the pace of immigration or manage the social consequences.

Britain’s politics is rapidly fragmenting along both ethnic and ideological lines. Jeremy Corbyn has recently founded a (yet unnamed) new left-wing party with former Labour MP Zarah Sultana that is likely to draw votes not just from the far left but also from those who are furious about Starmer’s stance on Israel. And Nigel Farage, whose Reform Party has been first in the polls for months, has warned that “civil disobedience on a vast scale” will break out unless migrants stop arriving in the UK in small boats. Britain faces not just a long, hot summer, but also a nervous one.

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This column reflects the personal views of the author and does not necessarily reflect the opinion of the editorial board or Bloomberg LP and its owners.

Adrian Wooldridge is the global business columnist for Bloomberg Opinion. A former writer at the Economist, he is author of “The Aristocracy of Talent: How Meritocracy Made the Modern World.”

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