‘Apocolypse Later’ says the Office for Budget Responsibility, which offers some truly scary forecasts.
Now, predicting is difficult, especially for the future. And the track record of economists is like mine for the 3.30 at Ascot, but still, brace yourself.
Debt is on an unsustainable path and the public finances are in a “very risky” condition.
The OBR says government debt could hit 300% of GDP, which would require massive spending cuts and permanently higher taxes.
By when? Oh, 2070, which isn’t going to be a problem for very many of us, extraordinary medical advances notwithstanding.
That we are leaving a burden for our grandchildren is the usual complaint. But that misunderstands what the debt is for – it is spending now to improve their inheritance, not dimmish it.
The interest payments on those – remember, totally imaginary debts – don’t go to some evil cabal of offshore bankers. They mostly come back to us, via pensions or the Bank of England, which owns the biggest stock of that debt.
This is not to say the OBR predictions are good. They are very, very bad.
But the OBR, one of our best, smartest institutions, will be wrong. Even it knows it will be wrong.
What it is trying to do is flag the likely erosion of the tax base from huge spending on an older population. No-one is making budgets on 2070 projections, but those predictions might help policy makers work out how NHS charging should look and not be massively behind the curve.
The OBR’s work is a public service, the aim of which is to avoid apocalypse, rather than to seriously predict it.
Two things: Short-term shocks aside, we generally get richer in the long run.
In the even longer run, we’re all dead.
Sleep tight.
