'State finances on unsustainable path if public spending promises are met'

THE UK's state finances are on an “unsustainable” path due to a raft of public spending promises the Government “cannot afford” in the longer term, the boss of UK’s official forecaster has warned.

- by HENRY SAKER-CLARK & DAVID LYNCH

It came as the Office for Budget Responsibility said public finances are in a “relatively vulnerable position” amid pressure from recent U-turns on planned spending cuts.

State finances are facing “mounting risks” but recent governments have had only limited success in improving the fiscal outlook, the OBR said.

Richard Hughes, chairman of the organisation, indicated that governments will need to adjust spending plans in the longer term to avoid national debt ballooning.

Downing Street, however, rejected suggestions that the Government is failing to heed warnings about the future of the public finances.

Mr Hughes said the projected rise in state pension spending linked to the triple lock commitment for annual increases was contributing to increased national debt.

He said the triple lock “is one of a series of age-related pressures that pushes public spending upwards steadily over a number of years and, as you saw in our previous report, when you project trends in both pension spending and health and other age related spending forward, the UK public finances are in an unsustainable position in the long run.

“The UK cannot afford the array of promises that are displayed to the public if you just leave those unchanged, based on a reasonable assumption about growth rates in the economy and in tax revenues.”