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| OBR urges £19bn more in spending cuts or tax rises | OBR urges £19bn more in spending cuts or tax rises |
| (about 5 hours later) | |
| An ageing UK population will put "unsustainable" pressure on public finances unless some £19bn of spending cuts or tax rises are introduced, says the Office for Budget Responsibility. | An ageing UK population will put "unsustainable" pressure on public finances unless some £19bn of spending cuts or tax rises are introduced, says the Office for Budget Responsibility. |
| "Population ageing will put upward pressure on public spending," it said. | "Population ageing will put upward pressure on public spending," it said. |
| The OBR said these additional savings would be needed in the year to April 2019, on top of the already-announced £153bn in austerity measures. | The OBR said these additional savings would be needed in the year to April 2019, on top of the already-announced £153bn in austerity measures. |
| It said to overcome this, there should be a steady influx of immigrants. | |
| The independent body's comments came in its latest fiscal sustainability report. | |
| 'Finances on unsustainable path' | |
| The OBR said that to return the UK's debt to GDP ratio to its pre-crisis level of around 40% of GDP by 2062-63 would require a permanent increase in taxes or cuts in spending of £19bn, equivalent to 1.2% of GDP. | The OBR said that to return the UK's debt to GDP ratio to its pre-crisis level of around 40% of GDP by 2062-63 would require a permanent increase in taxes or cuts in spending of £19bn, equivalent to 1.2% of GDP. |
| It also warned that if no action was taken, the cost of an increasingly-elderly population and the provision of pensions and healthcare would erase the impact of much of Chancellor George Osborne's spending cuts, | It also warned that if no action was taken, the cost of an increasingly-elderly population and the provision of pensions and healthcare would erase the impact of much of Chancellor George Osborne's spending cuts, |
| "It is clear that longer-term spending pressures, if unaddressed, would put the public finances on an unsustainable path." the report says. | "It is clear that longer-term spending pressures, if unaddressed, would put the public finances on an unsustainable path." the report says. |
| It added that if nothing was done to address these "demographic pressures" then it would create a "structural deterioration", or financial hole, equivalent to £65bn in today's terms. | It added that if nothing was done to address these "demographic pressures" then it would create a "structural deterioration", or financial hole, equivalent to £65bn in today's terms. |
| The OBR also said the introduction of a single-tier state pension slightly reduced the burden on public sector debt, but added that spending on healthcare would be the biggest fiscal pressure over the next five decades. | The OBR also said the introduction of a single-tier state pension slightly reduced the burden on public sector debt, but added that spending on healthcare would be the biggest fiscal pressure over the next five decades. |
| The OBR, founded in 2010, provides independent economic forecasts as background for the preparation of the UK Budget. | The OBR, founded in 2010, provides independent economic forecasts as background for the preparation of the UK Budget. |
| Immigrants | |
| It said that to overcome the effects of the ageing population over the coming decades, there should be a steady influx of immigrants each year. | |
| The report said that allowing more than 140,000 immigrants a year into the the UK from 2016, would increase the number of people in work, and would improve the national public finances. | |
| It says the UK's borrowing as a proportion of GDP would be 99% if there was a steady flow of immigrants, but it also says that if there was "zero gross migration", public borrowing would rise to 174% of GDP. | |
| "Our sensitivity analysis shows that overall migration has a positive impact on the sustainability of the public finances over our 50 year horizon," the OBR said. |