Britain's Public Debt: Set to Triple in 50 years!!!

The Office for Budget Responsibility projects a near tripling of the UK national debt from just under 100% of GDP now to a massive 274% in 50 years time.

This is due to a projected increase in public spending, while income lags behind.

Public spending is set to rise from 45% to 60% of GDP. In the coming years we will need to spend many billions more on pensions, health and tackling climate change.

At the same time we are committed (for the next 5 years at least) to a steady fiscal base, at least in terms of the main sources of taxation: income tax and national insurance.

Neither main party currently has any realistic plan for how we are going to meet our increased spending, and both main parties are shirking the biggest fiscal challenge of all: sorting out social care.

Thankfully this is just a projection based on current trends, and it's unlikely that any government would let this happen, but rather than actively deal with it, both Labour and the Tories are just hoping for the best.

If we can nudge up our productivity growth to just 2.5% a year, instead of the 1.5% the OBR assumes in its modelling above, then we will actually bring out debt down to 60% of GDP over the same time period.

The cost of paying interest on this debt is £100 bn a year. This dwarfs spending within most government departments.

An Ageing population, falling birthrate and moving away from fossil fuels are all drivers, but reducing the debt by raising taxes and cutting spending hobbles the economy.

Solutions...?

The government have mooted borrowing more, specifically for investment, which I'm generally in favour of given the dire situation we are in.

I think green tech has an obvious role to play boosting our economic growth, if we are coming off fossil fuels, it is a no-brainer to try and profit out of the transition.

Taxation is a tricky one.... I think the comfortably well off who have a partial income from property and other investments are in for a shock this budget!

We need to sort out the benefits bill - I'm sure there is scope for linking benefits receipt to some kind of voluntary work for most people in receipt of benefits.

We urgently need some kind of new deal regarding social care, this simply isn't affordable within the current model as it's stretching local councils to the limit. Actually maybe forcing people on benefits to become a kind of home-help army could work, although the obvious downside is I'm not sure how caring they'd be if they're forced into it, just thinking out loud, it's probably a TERRIBLE idea!

There has to be better solutions for social care - maybe better benefits for family and friends who are carers for elderly people - would help.

Immigration could be a solution to our declining birth rate, but that's unlikely to be popular politically!

Final thoughts.... expectation management....

I hate to say it, but I think Labour were right to strike that tone of pessimism in their first 100 days, just let people know there are limited things you can do to make like better, it's preferable to giving people false hope, because I don't think there is any actual hope of things getting better.

But then again things aren't that BAD either, are they...? Maybe people just need to adjust their sites down so that 'getting by' is OK!?!?

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