Britain must find an additional £17bn of spending cuts or tax rises to help defuse an impending demographic timebomb, the government's official forecaster has warned.
In its annual fiscal sustainability report, the Office for Budget Responsibility (OBR) said at least £17bn of extra tax hikes or spending cuts will be needed in 2017 to get Britain's debt back to pre-crisis levels by 2061.
Britain's ageing population will increase the deficit by £65bn in today's money if nothing is done, the OBR said, wiping out more than half the current round of hard-fought for savings by the Coalition government.
"In the absence of offsetting tax increases or spending cuts this would widen budget deficits over time and eventually put public sector net debt on an unsustainable upward trajectory," it added.
"It is likely that such a path would lead to lower long-term economic growth and higher interest rates, exacerbating the fiscal problem. The UK, it should be said, is far from unique in facing such pressures."
To avoid the shock of a one-off fiscal tightening, the government could also opt for a series of tax increases or spending cuts worth an additional £6bn every decade until 2061, the OBR said.
The fresh round of cuts come on top of George Osborne's £123bn, seven-year fiscal consolidation programme, which includes hundreds of thousands of public sector job losses, an overhaul of the welfare system and a higher pension age.
The ageing population is the key driver behind the pressure on public finances, as spending on health care and pensions increases, while dwindling tax revenues from sources such as North Sea oil interests could also have an impact.
telegraph.co.uk
In its annual fiscal sustainability report, the Office for Budget Responsibility (OBR) said at least £17bn of extra tax hikes or spending cuts will be needed in 2017 to get Britain's debt back to pre-crisis levels by 2061.
Britain's ageing population will increase the deficit by £65bn in today's money if nothing is done, the OBR said, wiping out more than half the current round of hard-fought for savings by the Coalition government.
"In the absence of offsetting tax increases or spending cuts this would widen budget deficits over time and eventually put public sector net debt on an unsustainable upward trajectory," it added.
"It is likely that such a path would lead to lower long-term economic growth and higher interest rates, exacerbating the fiscal problem. The UK, it should be said, is far from unique in facing such pressures."
To avoid the shock of a one-off fiscal tightening, the government could also opt for a series of tax increases or spending cuts worth an additional £6bn every decade until 2061, the OBR said.
The fresh round of cuts come on top of George Osborne's £123bn, seven-year fiscal consolidation programme, which includes hundreds of thousands of public sector job losses, an overhaul of the welfare system and a higher pension age.
The ageing population is the key driver behind the pressure on public finances, as spending on health care and pensions increases, while dwindling tax revenues from sources such as North Sea oil interests could also have an impact.
telegraph.co.uk
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