Documents to download

Commentary on the public finances has been prominent following the Chancellor’s Spring Statement on 13 March 2018.  Much of the comment has focussed on developments since the financial crisis and forecasts for the next few years. This Briefing takes a wider perspective and places the existing debt and deficit positions in a longer-term context, both historical and into the future. From this perspective, it explores views on the question of whether the debt position is ‘sustainable’.

The Briefing looks at the origins and history of the national debt, the reasons why it varies over time and how interest payments on the debt arise—and subsequently themselves feed back into the debt.

Based on historic analysis, it could be argued that the current position of the UK public finances is sustainable. However, the Office for Budget Responsibility (OBR) is specifically tasked with considering sustainability as part of its remit, and it takes a different, forward-looking perspective. The OBR’s projections have “huge range of uncertainty”, but on its central projection it concludes that the fiscal position is unsustainable over the long-term. The key reason for this is the impact of “an ageing population and further upward pressure on health spending from factors such as technological advancements and the rising prevalence of chronic health conditions”. The OBR concludes that: “policymakers and would be policymakers will need to think carefully about the long-term consequences of any policies they introduce in the short-term”. Brexit also introduces a further source of uncertainty both in the shorter and longer terms.

The Briefing concludes with the policy implications put forward by the OBR, as well as from some shorter term work by the Institute for Fiscal Studies and a related report by the Institute for Economic Affairs.


Documents to download

Related posts

  • The UK’s arts and entertainment sector has been one of the areas worst affected by the coronavirus pandemic. The decline in revenues and the number of workers furloughed over the past few months is second only to the accommodation and food sector. This article examines the impact of the pandemic on the UK’s cultural industry and the Government’s recently announced support package worth £1.57 billion aimed at helping the sector recover.

  • The coronavirus lockdown was introduced to reduce the spread of the disease. However, it also gave rise to substantial costs, both to the economy and in areas such as health, education, domestic violence and inequality. This article considers one analysis of these costs and how they compare to the benefits of the lockdown. This is the subject of an oral question in the House of Lords on 28 July 2020.