Britain's spiffing new Office for Budget Responsibility – a kind of UK version of the CBO – issued a new report on fiscal sustainability today. As my colleague at the Spectator Pete Hoskin observes it is not chock-a-block with optimism even if it's also meant to be a warning of what could happen, not a prediction of what will. Nevertheless, the assumption that spending will grow in line with GDP while present revenue policy remains much the same produces this gloomy chart:
As Pete explains:
[A]s they put it in the report, "These projections suggest that the public finances are likely to come under pressure over the longer term, primarily as a result of an ageing population." Most of the upwards pressure on spending that they foresee is because of people dying later. Health spending will go from 7.4 per cent of GDP in 2016 to 9.8 per cent in 2061. Long-term care from 1.2 per cent to 2. And pensions from 5.5 per cent to 7.9 (although public sector pensions are slated to fall). Stir in debt interest repayments, rising from 2.8 per cent to 4.5, and you have a dangerous cocktail of more spending, spending, spending.
Quite. There's much to ponder in this, not least the possible need for more, not less, immigration as part of a range of measures to address the challenges of a wrinkled population. However, and for all that the National Health Service is scarcely the envy of the world, I wonder what our American cousins think of a budget projection that forecasts spending less than 10% of GDP on healthcare in 50 years time. Bad news is a matter of perspective, I suppose.
The Dish 