Daniel Herring has a useful CAPX piece on the unsustainable nature of UK debt.
Britain is going bankrupt in slow motion
The OBR’s latest Fiscal Risks and Sustainability report, published this week, gives a blunt assessment of the UK’s public finances: we can’t go on like this. If nothing changes, government debt will rise to an unsustainable 300% of GDP in 50 years’ time.
How did things get so bad? Well, there’s one big demographic challenge driving that number: the UK is an ageing society, with the median age projected to rise from 40 in 2025 to 49 in 2075. An older society is expensive; as each year passes, demands on the state by retirees gets larger, while the workforce that has to pay for it all gets smaller (first in relative terms, and eventually in absolute terms as well).
A familiar problem but the whole piece is still well worth reading as a reminder that this one isn't going away if voters continue to vote for political parties with no interest in resolving it. The political fads, environmental fantasies and antiquated ideologies we are still seeing today won't do it.
Britain is going bankrupt in slow motion
- The OBR says UK debt is on course to hit 300% of GDP by 2075
- If politicians wait until 2052 to act, the spending cuts needed more than double
- Sooner or later, taxes rise, spending falls or growth accelerates – duck all three, and we face fiscal catastrophe
The OBR’s latest Fiscal Risks and Sustainability report, published this week, gives a blunt assessment of the UK’s public finances: we can’t go on like this. If nothing changes, government debt will rise to an unsustainable 300% of GDP in 50 years’ time.
How did things get so bad? Well, there’s one big demographic challenge driving that number: the UK is an ageing society, with the median age projected to rise from 40 in 2025 to 49 in 2075. An older society is expensive; as each year passes, demands on the state by retirees gets larger, while the workforce that has to pay for it all gets smaller (first in relative terms, and eventually in absolute terms as well).
A familiar problem but the whole piece is still well worth reading as a reminder that this one isn't going away if voters continue to vote for political parties with no interest in resolving it. The political fads, environmental fantasies and antiquated ideologies we are still seeing today won't do it.
But we already know that.
The OBR report highlights the challenges an ageing population poses for the UK: sooner or later, taxes rise, spending falls or growth accelerates – duck all three, and we go bankrupt. How painful the correction turns out to be remains a political choice.
The UK is sick – but far from terminal. It needs medicine now: cuts to public spending, less reliance on the state and a relentless focus on growth. Prompt action will restore a healthy economy and sound public finances. Waiting will make things much worse.
The OBR report highlights the challenges an ageing population poses for the UK: sooner or later, taxes rise, spending falls or growth accelerates – duck all three, and we go bankrupt. How painful the correction turns out to be remains a political choice.
The UK is sick – but far from terminal. It needs medicine now: cuts to public spending, less reliance on the state and a relentless focus on growth. Prompt action will restore a healthy economy and sound public finances. Waiting will make things much worse.
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