Government Efforts To Control Public Debt To Cost Households Over GBP5k Per Year

Wed, 27 May 2009

British households could face a 'fiscal squeeze' of over £5000 a year by 2018 due to the combined effects of rising public debt and an ageing population, according to PricewaterhouseCoopers .

Economists at the world’s largest professional services firm claim fiscal tightening of between 8 and 9.3 per cent of GDP will be needed each year until 2018 to get UK public debt back under control and cover the long-term fiscal costs of an ageing population.

The figures suggest the additional "fiscal squeeze" of around £115bn to £133bn, through increased taxes or public spending cuts, could cost the average household between £4,600 and £5,300 a year from 2018.

PwC said that in order to meet increasing pension and healthcare costs relating to an ageing population and to avoid an unsustainably large rise in public debt, future generations of workers face a heavy monetary burden.

John Hawksworth, head of macroeconomics at PwC, commented: "Waiting until age-related public spending rises significantly before making additional fiscal adjustments would be imprudent."

"Provisions for these potential costs should be made sooner rather than later to avoid unduly large increases in the tax burden on future generations of workers to pay for the future pensions and healthcare costs of current generations."
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