CITY AM reports that the government’s immense liabilities and the long-term challenge to public finances were laid out in an official report yesterday. According to the Office for Budget Responsibility (OBR), gross liabilities of the government climbed significantly during 2012-13, rising by £276bn to £2.893 trillion, an increase of nearly a tenth.
Most of the increase was attributed to a hike in the expected value of future public sector pension payments, which rose by £166bn to £1.172 trillion.
The ageing population is the largest factor putting pressure on public spending. The watchdog expects that by the 2030s, public sector net debt will begin to rise again as spending associated with an increasingly elderly population begins to climb.
Health spending is expected to increase from 6.4 per cent of GDP in 2018 to 8.5 per cent in the 2060s, during which time state pension spending and long-term social care costs are forecast to rise by 2.4 and 1.1 percentage points respectively as a share of GDP.