MNI BRIEF: UK Public Finances On Unsustainable Path - OBR
MNI (LONDON) - The Office for Budget Responsibility said Thursday that the UK public finances are on an unsustainable path in the long term.
The OBR's projections showed that on current policy settings over the next 50 years public spending would rise from its current 45% of GDP to over 60%, with tax revenues stuck at around 40% of GDP with debt rising as a result to 274% of GDP and over 300% of GDP on an upside risks scenario. To get debt back to its pre-pandemic levels average fiscal tightening of 1.5 per cent of GDP per decade would be needed, the report published Thursday showed.
One way out for the UK would be to boost productivity, with a one percentage point rise in productivity enough to keep debt-to-GDP below 100% for the next 50 years and improvements in the health of the population could reduce the ratio by another 40% of GDP according to the OBR's estimates. (see MNI INTERVIEW2: New UK Govt's Growth Boost Little Help For OBR Projections)