UK’s ‘unsustainable’ could reach 320% of GDP in 50 years, OBR warns
Britain’s public finances are on an “unsustainable” long-term path with a debt burden that could more than treble without further tax rises to cover the rising cost of an ageing population and falling fuel duties, the Treasury’s independent forecaster has warned.
The Office for Budget Responsibility said that if economic shocks continued to hit the public finances, debt was on course to reach almost 320% of annual national income (GDP) in 50 years’ time – up from 96% now – unless successive governments raised revenues to offset rising costs.
“The pressures of an ageing population on spending and the loss of existing motoring taxes in a decarbonising economy leaves public debt on an unsustainable path in the long term,” the OBR said.
In its annual health check of the public finances, the OBR said the government had already spent as much this year – 1.25% of GDP – to help households cope with the cost of living crisis as it had supporting the economy through the 2008 financial crisis.
If energy prices remained high over the next year and ministers continued extending this support, government borrowing would surge by £40bn in 2023-24.
Richard Hughes, the OBR chair, said the UK’s debt burden had increased by £1tn above forecasts 20 years ago, following a series of economic shocks – and there was no reason to think these would stop.
Interest rates were already beginning to rise, increasing government borrowing costs, while an ageing population added a further burden to Whitehall spending departments, especially the health service.
The switch from petrol and diesel cars to electric vehicles, denying the government fuel duty revenues, would be another hit to revenues over successive decades. The UK government has pledged to ban the
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