Britain faces decades of spending cuts and tax increases if the national debt is to be brought under control, economists have forecast 
By James Kirkup, and Angela Monaghan
9:47PM BST 12 Apr 2012
An additional and “sustained period of fiscal tightening” will be needed.
Despite the Coalition’s five-year programme of spending cuts and tax increases, the national debt is to rise from 72 per cent of gross domestic product this year to 76 per cent in 2014-15. Debt will peak at £1.5 trillion in 2016-17.
As a sensible precaution against future crises, the OECD said the developed countries should have a long-term goal of bringing debt down to 50 per cent of GDP.
For Britain to hit the target will require austerity measures equal to about 8 per cent of the economy, it was calculated. That is about £126 billion in today’s prices, roughly equal to the scale of the current austerity package. But the costs arising from the recent financial crisis and economic downturn will be relatively minor compared with the long-term costs of an ageing population, the Paris-based forecaster said.
Because higher taxes “adversely affect economic performance” a large part of any future debt-reduction work should come from cuts in public spending.
As well as reforming their health, education and pension systems, governments should seek to rein in spending on benefits and increase the financial incentives for people to work and save
2 Responses
Bearing in mind that money is created into the economy as debt these days, do they explain how we’re supposed to cope or to pay money back when there’s so little in the system? Do they understand that if the debt were paid back entirely there’d be no money left in the system at all bar a handful of notes and coins? Do they, in fact, have a clue? They do not, so we can ignore them and listen instead to Steve Keen for example or, indeed, me 🙂 http://www.economania.co.uk
JUST HEARD ON RADIO 4 SATERDAY THE 14TH OF APRIL AT 4.30,, S A G A WANT THE GOVERNMENT TO ABOLISH THE RETIREMENT AGE, WORK TILL YOU DIE IS KNOW THERE POLICY.
AND WHO WILL DO THE MEDICALS TO CLAIM A NEW ELDER BENIFIT FOR THOSE WHO CAN NO LONGER WORK .. ATOS OR SERCO .. JEFFREY ..