Ageing population to cripple UK finances

By Georgie Keate

£65 billion in cuts or tax increases will be needed if the UK is to pay for its pensioners in 50 years' time, the Office for Budget Responsibility has warned.

The independent watchdog found the UK is following an "unsustainable path" where the costs of health care and pensions will far outstrip revenue from taxes as the population gets older.

Under the report's calculations, the government would have to "increase taxes or cut spending by around 2.6% of GDP from 2018 onwards" to bank enough money for the future.

This is added to Osborne's seven year programme to cut £123 billion which has forced retirement age up, lost thousands of jobs and made huge changes to the welfare system.

"In the absence of offsetting tax increases or spending cuts this would widen budget deficits over time and eventually put public sector net debt on an unsustainable upward trajectory," the report warned.

The ageing population was cited as the main reason for public finances running out of money in the future, a problem familiar to most developed economies.

As more of the UK's citizens reach the age of retirement, fewer people will be paying taxes to pay for the burden of health and social care costs.

The report lists a number of other financial worries such as the decline in North Sea oil and recommends a search for replacement sources of revenue.