The population in the UK is ageing and as a result, cost of care is rising. The OBR states that greater spending cuts will need to take place if the national debt is to be kept under control for the long term. The independent economic forecast group further states that at the rate Britons are ageing it will be impossible to keep up with the costs, in their words, “clearly unsustainable.”
They contend that if the government were able to save as much as £123 billion during the next seven years, the government would still need to raise taxes or increase spending cuts which would be equal to a little over 1pc of the GDP. In today’s market, that is equal to about £17 billion annually. It would take at least this amount to bring the national debt back to where it was before the debt crisis.
However, if these figures seem grim, consider the fact that the public sector net debt could decline from 74% of the GDP which is forecast for the 2016-17 fiscal year to perhaps 57pc in the middle part of the 2020’s and then by the early part of the 2060’s the public sector debt will reach a level unprecedented to 89pc of the GDP. As bad as that sounds, this is a far cry better than what had been projected last year where analysts said the public sector debt at that time would be as high as 107pc of the GDP.
Last year in his autumn statement, Osborne said that he believed austerity would need to be held over at least another two years but in reality, it will be several decades before the UK can lift itself out of debt.