The UK government must make deeper cuts or raise more money in the future to keep public finances in check, the Office for Budget Responsibility says.
In its annual look at the government’s finances, the OBR says in 2017-18 public spending needs to be cut by another £17bn or the same amount raised in taxes to stop debt ballooning.
The OBR says this change would bring total debt back to 40% of GDP by 2061.
Without the move it says debt would reach 89% of annual income by 2061.
It says the main reason more cuts are needed, on top of the £123bn already going through, is the rising healthcare costs caused by more people living longer.
It also says the fiscal position is unsustainable if the public sector’s debt is not contained, as it would then take more of the national income to pay interest on its growing debts.
The OBR’s report says its projections suggest that the public finances are likely to come under pressure over the longer term, “primarily as a result of an ageing population”.
This would mean the government spending more on age-related items such as pensions and health care with revenues staying broadly the same.