UK 'must save £50bn a year or face a similar crisis to Greece'

Total liabilities including future pension and health commitments exceed £2trn, or roughly £80,000 per household

A further austerity programme half as large again as the current package of tax hikes and public-spending cuts will be required to prevent a Greek-style debt crisis from overtaking Britain in the coming years, according to the Office for Budget Responsibility (OBR), the independent body set up by the Government last year to oversee public finances.

Britain's ageing population – and especially the demands placed on the National Heath Service – is the biggest driver of the coming crisis, the OBR says. In its first report on the long-term (50 year) horizon for the national debt, the OBR says that Britain's public-sector net debt, more colloquially known as the national debt, stands at £906bn, some 60 per cent of national income, or £35,000 per household.

But the Government's total liabilities – including future commitments for pensions, health and social care, PFI projects, the nationalised banks and nuclear decommissioning – exceed £2trn, or about £80,000 per family.

On one of the OBR's more pessimistic projections, spending cuts and tax rises of about £50bn a year would be required to return the national debt to the levels prevailing before the financial crash in 2007-08. That compares with the £116bn fiscal squeeze the Government is planning to implement by the end of this Parliament and suggests further pain in the next parliament. If action is not taken, it says, the national debt is predicted to rise to 200 per cent of GDP, unsustainable on any assumption, and the fear of it would be sufficient to provoke a sovereign debt crisis.

If health-service spending is controlled through higher productivity, the planned squeeze on the rest of public spending will be less severe, but the OBR still has a central projection that implies a further £22bn of cuts and tax rises during the next parliament, suggesting little let-up in what promises to be a decade of austerity.

On public-sector pensions, the OBR says that the bill now stands at £1.1trn, or some 80 per cent of GDP, but the bill will decline in relation to the size of the economy, meaning it is not obviously by itself "unsustainable".

Liabilities arising from private finance initiative contracts were around £40bn – far above the £5.1bn previously revealed. Student loans are projected to add £63bn in today's terms to the net debt by the early 2030s.

Meanwhile, the Office for National Statistics reported a fall in unemployment of 26,000 in the three months to May, compared to a drop of 88,000 in the three months to April – a slackening in the rate of improvement.

The numbers claiming Jobseeker's Allowance rose for a fourth successive month to 1.5 million, some of which reflects reforms to the benefits system. Wage rises, at 2.4 per cent, remain well below inflation of 4.2 per cent.

Start your day with The Independent, sign up for daily news emails
Life and Style
tech
Arts and Entertainment
Rocky road: Dwayne Johnson and Carla Gugino play an estranged husband and wife in 'San Andreas'
filmReview: In the face of all-round devastation, even Dwayne 'The Rock' Johnson appears a little puny
News
i100
Arts and Entertainment
Bright lights, big city: Melrose Avenue in Los Angeles by dusk
books
Sport
Harry Kane makes Paul Scholes' Premier League team of the season
footballPaul Scholes on the best players, managers and goals of the season - and the biggest disappointments
News
i100
News
ebookA unique anthology of reporting and analysis of a crucial period of history
Latest stories from i100
Have you tried new the Independent Digital Edition apps?
Independent Dating
and  

By clicking 'Search' you
are agreeing to our
Terms of Use.

iJobs Job Widget
iJobs Money & Business

Guru Careers: Pricing Analyst

£30 - 35k: Guru Careers: We are seeking a Pricing Analyst to join a leading e-...

SThree: Trainee Recruitment Consultant

£20000 - £25000 per annum + OTE £45K YR1: SThree: At SThree, we like to be dif...

SThree: Trainee Recruitment Consultant

£20000 - £25000 per annum + competitive: SThree: Did you know? SThree is a mul...

Guru Careers: C# Project Team Lead

£55 - 65k (DOE): Guru Careers: A unique opportunity for a permanent C# Develop...

Day In a Page

Fifa corruption: The 161-page dossier that exposes the organisation's dark heart

The 161-page dossier that exposes Fifa's dark heart

How did a group of corrupt officials turn football’s governing body into what was, in essence, a criminal enterprise? Chris Green and David Connett reveal all
Mediterranean migrant crisis: 'If Europe thinks bombing boats will stop smuggling, it will not. We will defend ourselves,' says Tripoli PM

Exclusive interview with Tripoli PM Khalifa al-Ghweil

'If Europe thinks bombing boats will stop smuggling, it will not. We will defend ourselves'
Raymond Chandler's Los Angeles: How the author foretold the Californian water crisis

Raymond Chandler's Los Angeles

How the author foretold the Californian water crisis
Chinese artist who posted funny image of President Xi Jinping facing five years in prison as authorities crackdown on dissent in the arts

Art attack

Chinese artist who posted funny image of President Xi Jinping facing five years in prison
Marc Jacobs is putting Cher in the limelight as the face of his latest campaign

Cher is the new face of Marc Jacobs

Alexander Fury explains why designers are turning to august stars to front their lines
Parents of six-year-old who beat leukaemia plan to climb Ben Nevis for cancer charity

'I'm climbing Ben Nevis for my daughter'

Karen Attwood's young daughter Yasmin beat cancer. Now her family is about to take on a new challenge - scaling Ben Nevis to help other children
10 best wedding gift ideas

It's that time of year again... 10 best wedding gift ideas

Forget that fancy toaster, we've gone off-list to find memorable gifts that will last a lifetime
Paul Scholes column: With the Premier League over for another year, here are my end of season awards

Paul Scholes column

With the Premier League over for another year, here are my end of season awards
Heysel disaster 30th anniversary: Liverpool have seen too much tragedy to forget fateful day in Belgium

Liverpool have seen too much tragedy to forget Heysel

Thirty years ago, 39 fans waiting to watch a European Cup final died as a result of a fatal cocktail of circumstances. Ian Herbert looks at how a club dealt with this tragedy
Amir Khan vs Chris Algieri: Khan’s audition for Floyd Mayweather may turn into a no-win situation, says Frank Warren

Khan’s audition for Mayweather may turn into a no-win situation

The Bolton fighter could be damned if he dazzles and damned if he doesn’t against Algieri, the man last seen being decked six times by Pacquiao, says Frank Warren
Blundering Tony Blair quits as Middle East peace envoy – only Israel will miss him

Blundering Blair quits as Middle East peace envoy – only Israel will miss him

For Arabs – and for Britons who lost their loved ones in his shambolic war in Iraq – his appointment was an insult, says Robert Fisk
Fifa corruption arrests: All hail the Feds for riding to football's rescue

Fifa corruption arrests

All hail the Feds for riding to football's rescue, says Ian Herbert
Isis in Syria: The Kurdish enclave still resisting the tyranny of President Assad and militant fighters

The Kurdish enclave still resisting the tyranny of Assad and Isis

In Syrian Kurdish cantons along the Turkish border, the progressive aims of the 2011 uprising are being enacted despite the war. Patrick Cockburn returns to Amuda
How I survived Cambodia's Killing Fields: Acclaimed surgeon SreyRam Kuy celebrates her mother's determination to escape the US

How I survived Cambodia's Killing Fields

Acclaimed surgeon SreyRam Kuy celebrates her mother's determination to escape to the US
Stephen Mangan interview: From posh buffoon to pregnant dad, the actor has quite a range

How Stephen Mangan got his range

Posh buffoon, hapless writer, pregnant dad - Mangan is certainly a versatile actor