Austerity ‘to last 50 more years’ in Britain after rising health spending hits finances
Tax rises and an extra £39billion in spending cuts a decade will be needed to keep debt in check as the population ages
BRITS face “50 years of austerity” as health spending needs to double by the 2060s, the Treasury’s forecasters said yesterday.
Tax rises and an extra £39billion in spending cuts a decade will be needed to keep debt in check as we live longer and the birth rate slows.
The Office for Budget Responsibility said health spending estimated at 7.1 per cent of economic output (GDP) in 2018-2019 is projected to almost double to 13.8 per cent in 2067-68 — £300billion in today’s money.
OBR chief Robert Chote said age-related spending would account for 29 per cent of the Government’s entire budget by that time. The cost for state pensions and disability benefits will also rise.
Britain’s old age dependency ratio — over 65s as a proportion of those aged 16 to 64 — is expected to rise from below 30 per cent to almost half by the mid-2060s.
The OBR said public finances were likely to face “significant pressure” due to an ageing population and increased health spending.
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Without tax rises and spending cuts the Budget deficit would widen over time and put public sector net debt “on an unsustainable upward trajectory”.
The OBR said a so-called policy tightening every decade for the next 50 years is needed to get borrowing under control.
This would need to equate to around 1.9 per cent of GDP, equivalent to £39billion each decade, it added.
Analysts say a quarter of this is attributable to last month’s announcement of an extra £20billion for the health service.
Torsten Bell of the independent Resolution Foundation think tank said: “Without policy change, we’re on course for a debt to GDP ratio of nearly 280 per cent in the 2060s.”
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