London, Sep 14 (IANS) The United Kingdom’s public debt is projected to exceed 270 per cent of its gross domestic product (GDP) by 2070, according to a report published by the Office for Budget Responsibility (OBR).
The projection is based on policy settings as of March 2024.
In its latest Fiscal Risks and Sustainability Report, the OBR forecast that public spending in the United Kingdom (UK) will rise from 45 per cent to over 60 per cent of GDP over the next 50 years, while revenues are expected to remain around 40 per cent of GDP, demanding higher borrowing and spending tightening policies.
The report attributed this growing financial pressure to a series of shocks, including the global financial crisis, the pandemic, the energy crisis, and long-term challenges such as an ageing population and climate change.
The OBR warned that if these pressures materialise, the government would need to take significant policy actions to prevent a debt spiral, reports Xinhua news agency.
To return the debt to pre-pandemic levels, an average fiscal tightening of 1.5 per cent of GDP per decade would be required over the next 50 years.
To mitigate this forecasted debt increase, the OBR recommended improving underlying economic conditions. This includes limiting global temperature rise to less than 2 degrees Celsius, improving public health, and boosting the productive potential of the economy. The report noted that every 0.1 per cent increase in productivity growth could reduce the debt-to-GDP ratio by 25 percentage points.
Richard Hughes, chair of the OBR, said during the press briefing for the report on Thursday that, in almost any scenario, the UK government will likely have to raise taxes or cut spending to keep public finances on a sustainable path in the long term.
–IANS
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