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September 13, 2024 - 7:00am
The Office for Budget Responsibility (OBR) has published a report showing that unless something drastic changes, Government debt is set to almost triple in the next five decades — from around 100% of GDP today to around 274% in 2071. The timing of the report is surely not a coincidence: it overlaps with Keir Starmer’s government starting a harsh campaign of austerity which will include tax increases and cuts to key components of social spending, such as fuel support for pensioners.
But these latest numbers from the OBR give the lie to Labour’s claim that austerity is required in the short term to improve the health of the economy in the long term. With numbers like these, the Government is clearly preparing the British population for a permanent and potentially drastic reduction in living standards. That is, Labour is the first of probably many governments to lead Britain into a period of managed decline.
Among a range of problems, one that stands out is demographics. Birth rates have been below replacement level since 1973, meaning that Britain’s population is ageing, and this ageing is starting to bite. Ironically, the Baby Boomers and younger generations lowered their birth rates mainly so that they could work and consume more, thereby boosting the economy. But this is turning out to be a sugar rush that only lasted two generations: now Millennials and Generation Z have to deal with the consequences.
The OBR report is also softening the population up for more immigration. It states that immigration is one way to bring public debt down because it will allow for economic growth. The report estimates an average of 315,000 net immigrants a year — and in estimating this, it feels like it is setting a target for the Treasury and the Home Office. This implies 14.8 million new immigrants by 2070, which in turn means that, assuming that there is a roughly static population due to low birth rates and ageing, immigrants will go from making up around 15% of the population today to making up around 31% of the population in 2070.
According to the report, Britain can solve its fiscal problems by increasing productivity growth — which has been effectively stagnant for around 15 years. This makes the OBR estimate of 1.5% growth per year on average extremely optimistic, and so the economic problems facing Britain are probably worse than what the report forecasts. It states that for every 0.1% average rate of growth above 1.5% annually, the public debt will fall by 25% of GDP by 2070. The phrase “if wishes were horses, then beggars would ride” comes to mind.
The OBR report is not merely a forecast of the future state of Britain: it is a roadmap laying out how the Civil Service will manage the decline of the country over the next 50 years. The plan is clear: extremely high rates of population replacement, much higher taxes, and much lower social spending. It is starting to feel like Britain’s grim future is predetermined.
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