Rishi Sunak grilled by Neil on 'green boiler' transition
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Such is the need to pour money into the public services over the next three years, the Office for Budget Responsibility (OBR) claimed an additional £10billion must be found by the Chancellor. As the UK faces a triple threat to its economic future, the OBR warned if Britain does not take action against climate change, debt could rise to 289 percent of GDP by the end of the century. Even in its baseline scenario of early action to achieving net-zero emissions, the UK’s debt will still rise by 21 percent of GDP or £469billion by 2050.
In a further blow to the UK, the OBR claimed the economy will recover to pre-pandemic levels next year but will suffer a permanent three percent drop in GDP.
This comes as the UK currently sits on a debt mountain of £2trillion due to the pandemic.
Richard Hughes, the OBR’s chairman, said: “Going into the next spending view this autumn, these pressures look particularly challenging.”
However, in a word of caution to the Chancellor, the OBR warned rising inflation and interests rates could put the debt mountain under even more pressure.
Mr Hughes added: “It used to be the case that governments could inflate their debt away.
“It is less and less the case as we go into the future.”
The report added, if the Government raises inflation it could raise public spending costs up from one percent to three percent of GDP by 2050.
John O’Connell, chief executive of the TaxPayers’ Alliance, said: “These numbers are a wake-up call of the fiscal pressures facing us as we emerge from the pandemic.
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“It’s clear the economy has been battered by Covid and left us a £10 billion black hole each year to add to our already 60-year high debt level.
“The Government must get a grip on spending and bring our astronomical debt levels down.”
Mr Sunak added: “The OBR has confirmed that the ‘unprecedented’ support the government has provided through the pandemic has helped to keep companies solvent and people in jobs.
“We will continue to invest in our public services and support those who need it as the economy recovers – including through our plan for jobs.”
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This forecast comes as the UK heads towards the final stage of the Prime Minister’s lockdown strategy.
While the Prime Minister is keen to restore the damaged economy, the NHS is facing a serve backlog.
According to The Daily Telegraph, the NHS is now planning to spend £10billion blitz to tackle the cancer backlog.
Despite the new spending package, health professionals have claimed it will take a prolonged time to catch up on treatments.
Professor Chris Whitty, the Chief Medical Officer, told the Local Government Association conference on Tuesday: “Right from the beginning we were aware of the fact that Covid would have a substantial indirect effect, probably as major as the direct effects over the long term.
“There was a group of people who were either unwilling, because of worries about safety, or unable to access acute services.
“There is likely to be a significant backlog of people who would have had disease picked up at an earlier stage under ordinary circumstances.”
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