Next Gen News

Accountability Office report of the budget suggests the UK will pay the price of an aging population and declining levels of taxation

Britain must prepare for decades of austerity, tightening, even after George Osborne ongoing expenses, to pay the price of an aging population, according to the independent Office of Budget Responsibility (OBR).

The OBR, which was established by the Chancellor to produce independent projections of public finances, says in its report that the rising cost of health care and pensions, and tax revenues down North Sea, this means that future governments must take steps to avoid debt levels rising inexorably.

No new tax increases or spending cuts, the OBR, he said, the public debt will reach a point less than 60% of gross domestic product (GDP) in mid 2020, against less 70% today, before rising rapidly to hit 107% in 2060-61.

Although the deterioration of public finances is more than a decade away, the OBR urges politicians to take long term decisions now to prevent the economy from falling into a debt crisis with the aging population. The warning is provided to receive a warm welcome inside the Treasury, which has moved quickly since the coalition came to power to limit the increase of pensions and health accounts.

Osborne is known to have excelled in the Comprehensive Spending Review last year that ministers should limit future spending commitments. However, pensions minister Iain Duncan Smith won the approval of a pension lump sum of £ 140 a week that could add billions of pounds to the bill for state pension. The Chancellor is also struggling to save the plan to raise the retirement age of state - a move that women aged 50 wounded. There was a concerted campaign to force the government to change direction.

The OBR also appeared to undermine the delicate negotiations of the Treasury public sector unions require further reductions in public sector pensions are unjustified. The tax watchdog revealed figures showing pension costs to decline over the next 50 years as a proportion of GDP, following the decision of the chancellor to improve performance in line with the index measuring the Consumer price inflation lower than retail prices.

Meanwhile, the other State "contingent liabilities", the Treasury hopes to never have to pay, such as guarantees for the banking sector affected by the crisis, the amount to over £ 200 billion.

Despite these estimates, watery eyes, the OBR said that the main reason that taxpayers should get used to decades of austerity is the rising cost of healthcare, from 7 4% of GDP to 9.8% in 2060, and the basic state pension, which will cost 7.9% of GDP against 5.5% today, even without the flat-rate system in place new.
"balance measures only look at the impact of government activity past," he said. "They do not include the present value of future expenditures that future governments know that you want to, for example, maintenance of health benefits, education and pensions.