Published today, an OBR report says an ageing population, climate change, rising geopolitical tensions and other pressures will eventually put the UK public finances on an unsustainable path. “The first step to solving a problem is admitting there is one.”

Published today, the UK's Office for Budget Responsibility (OBR) published a Fiscal risks and sustainability report, which is the latest update of their assessment of the current pressures on the public finances.

The report was initially scheduled for publication on 2 July 2024 but due to the UK General Election its release was postponed to today, 12th September.  The delay didn't alter the report's content, which is based on OBR's March 2024 Economic and fiscal outlook and government policy as it stood at the time of the 2024 Spring Budget presented by the previous Government on 6 March 2024.

In this, their 3rd annual Fiscal risks and sustainability report (FRS), the OBR focus on three risks to the long-term fiscal outlook: the potential economic and fiscal costs of climate-related damage; the impact of changing health trends on the public finances; and an updated set of long-range fiscal projections, including alternative scenarios concerning productivity and migration.

The OBR's report goes on to say "The analysis in this report shows that, based on policy settings in March 2024, these and other pressures would eventually put the public finances on an unsustainable path. Over the next 50 years, public spending is projected to rise from 45 to over 60 per cent of GDP, while revenues remain at around 40 per cent of GDP (Chart 1.1). As a result, debt would rise rapidly from the late 2030s to 274 per cent of GDP in their baseline projection. 

Longterm projections such as these are inherently highly uncertain but there is a similar upward debt trajectory in nearly all the alternative scenarios that we consider. Indeed, debt is projected to rise further to over 300 per cent of GDP, when further shocks and pressures are taken into account. 

In practice, if these pressures and shocks were to materialise as we project, then governments would need to take mitigating policy action to prevent this debt spiral from occurring. On our baseline projection, to return debt to its pre-pandemic levels would require an average fiscal tightening of 1.5 per cent of GDP per decade over the next 50 years".