1

National debt due to triple, say independent budget forecasters

The gap between how much money the state takes in and its spending will triple in the next 50 years, according to independent forecasters.

Public debt will rise due to an ageing and ill population as well as climate change, the fiscal watchdog the Office for Budget Responsibility (OBR) has said.

The ratio between debt and everything produced in the economy as measured by gross domestic product (GDP) will reach 270%.

Money blog: Most stressful UK jobs revealed

Latest figures show debt is nearly 100% of GDP.

Why?

The effects of climate change are estimated to damage the economy and public finances by adding between sums equivalent to 20% and 30% of GDP to the debt pile.

More on Uk Economy

But there could be an improvement in the estimates by making everyone healthier, the OBR said.

Improved population health could reduce national debt expectations by more than 40% by the mid-2070s.

Follow Sky News on WhatsApp
Follow Sky News on WhatsApp

Keep up with all the latest news from the UK and around the world by following Sky News

Tap here

As the population gets older fewer people are paying tax and more needs to be spent on health and care services, costing the state and raising debt levels.

It’s been described by the body as “unsustainable”.

As the combustion engine is phased out and motorists turn to electric vehicles revenue will be lost from fuel duty, cutting a key source of state revenue.

A carbon tax does not replace lost motoring taxes as fuel duty declines, the OBR’s report said.

What’s the OBR?

Please use Chrome browser for a more accessible video player

OBR debt report ‘not a forecast’ but warning

The office was established to crunch the public finance numbers, provide forecasts and analyse government budgets.

Its assessment of the long-term fiscal risks facing the economy was published on Thursday – a report which is typically published in July but was moved due to the UK general election.

The same warning was also made when last year’s report was issued.

Reaction

Be the first to get Breaking News

Install the Sky News app for free


In response, the chief secretary to the Treasury said: “The OBR has laid bare the shocking state that our public finances were left in by the previous government.

“That’s why this government began work immediately to address the inheritance with tough choices on spending alongside ambitious action to drive growth. By fixing the foundations, we will rebuild Britain and make every part of the country better off.”