12/07/12

  • OBR’s new report highlights difficult realities facing the UK economy in the coming decades

Commenting in the OBR’s new Fiscal Sustainability Report published today, David Kern, Chief Economist at the British Chambers of Commerce (BCC), said:

“This report, although subject to uncertainties, contributes to the transparency of our public finances, and provides a framework for debating long-term policy issues. The OBR’s projections remind us that the UK economy will face major challenges over the next few decades. Our public finances will come under serious long-term pressures due to ageing populations and the need to allocate more resources to spending on pensions, health and personal care. Even if the government’s tough austerity plan is implemented successfully by 2016/17 and the fiscal position improves until the mid 2020’s, the report suggests there will be a long-term deterioration in the decades that follow.

“There is a risk that the fiscal position will become unsustainable in the absence of further tax increases or spending cuts. Without corrective action, the grim implication is lower economic growth and higher interest rates. The UK faces difficult policy choices if it is to return to pre-crisis growth rates. Our limited resources mean that we have to adapt our economic and social ambitions, but the private sector must be empowered to increase productivity and create wealth and jobs. Only then, will we be able to pay for the rising cost of public services.”

Ends

Notes to editors:

A link to the report can be found here.

The British Chambers of Commerce (BCC) is the national voice of local business.

The BCC sits at the heart of a powerful nationwide network of Accredited Chambers of Commerce, serving over 100,000 businesses across the UK, which employ over five million people. For more information visit: www.britishchambers.org.uk

Media contacts

Liz Larvin
T: +44 [0]20 7654 5813
M: +44 [0]7825 746812
l.larvin@britishchambers.org.uk

Lisa Morrison
T: +44 [0]20 7654 5812
M: +44 [0]7717682221
l.morrison@britishchambers.org.uk