Public finances ‘unsustainable’ says OBR
The chancellor is likely to find it impossible to balance the books in the years ahead without increasing taxes or cutting spending, the Office for Budget Responsibility (OBR) has warned.
The OBR said the public finances were “on an unsustainable path”.
It blamed increased spending on the NHS and state pensions in particular, which is likely to grow faster than the economy as a whole, it said.
And public sector debt could increase from 82% of GDP to 234% by 2066-67.
That is based on an estimate that public sector borrowing would rise from 0.7% of GDP in 2021-22 to 16.6% by 2066-67.
The estimates came in its latest fiscal sustainability report.
Rather than moving into surplus, the budget deficit is also likely to get worse, the OBR said, rising from 0.7% of GDP in 2021-22, to 1.8% by the end of the next parliament.
The previous chancellor, George Osborne, had planned to balance the books by the end of this parliament.
However his successor, Philip Hammond, extended that deadline.
In the Autumn Statement he said he expected the deficit to be 2% of GDP by 2020-21, allowing him an extra £56bn of borrowing.