LONDON, Sept 12 (Askume) – British public debt could triple its current level within the next 50 years if government action is not taken immediately, regulators warned on Thursday, driven by a growing population, climate change and security risks.
The Office for Budget Responsibility said the debt will rise to 274% of GDP by the mid-2070s, up from about 100% currently, while others risk rising to more than 300% of GDP — as predicted last year .
“Indeed, if these stresses and shocks unfold as we expect, the government will need to take policy action to halt this debt cycle,” the OBR said.
According to OBR forecasts, public spending will need to rise from the current 45% of GDP to more than 60%, the highest level since the 1970s.
If global action is taken to limit climate change, the need for public spending would be lower – which could reduce debt levels by 10 percentage points – or if public health conditions improve, debt levels could be reduced by 40%.
However, the greatest benefits will come if the UK can return its economic productivity growth to pre-financial crisis levels and keep debt below 100% of GDP over the next 50 years.
The OBR will publish a more detailed overview of Britain’s public finances over the next five years on 30 October, as well as the first budget from new finance minister Rachel Reeves since Labour swept to power in the July election.
Reeves said taxes would likely rise and blamed the previous Conservative government for leaving a 22 billion pound ($29 billion) deficit in the public finances.
Darren Jones, Reeves’ deputy and chief secretary to the Treasury, said: “The OBR has exposed the shocking state of the public finances left by the previous government.”
“This administration must immediately begin working to address legacy issues, make tough decisions on spending and take ambitious actions to accelerate growth.”
($1 = 0.7667 British pounds)
