It is hard not to feel sympathy for the OBR. At least once a year the independent fiscal watchdog barks another warning that the UK public finances are on an unsustainable path.
Nonetheless, successive governments have been unable or unwilling to take the actions necessary to change course.
This year is no different. If anything, the risks are even greater, with the UK government’s cost of borrowing now consistently the highest in the G7, and no sign that public spending is being brought under control.
Too many subjects are still taboo, such as real reform of the NHS, or unpicking the ‘triple lock’ on the state pension. Politicians must be more honest with the public about the costs and trade-offs involved – and voters need to be more willing to listen.
Two big changes are needed to turn things around. First, the state must become smaller and more efficient. Second, and related to this, productivity has to improve across the whole economy.
On unchanged policies, public debt is already heading for an eye-watering 270% of national income within 50 years, even if productivity growth recovers to average 1.5% per year.
But if productivity growth remains weak at around 0.5%, this figure could explode to 647%. That should really set the alarm bills ringing.
This comes as the Chancellor has been warned by the Office for Budget of Responsibility the latest U-turns on spending cuts has left the UK more vulnerable.
The OBR also warned that the UK will be left vulnerable to be able to respond to future crises as Britain’s debt to gross domestic product (GDP) ratio will soar from 100% on Tuesday to 270% by the 2070s.
The OBR has hit out at successive governments warning that efforts to place the UK’s finances on to a stable footing has “been met with only limited and temporary success.”
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