NIESR sounds dire debt warning

The UK government faces hard policy choices over years to come due to the large deficits in the public balance sheet built up in the credit crunch, a hard-hitting new report stated today.

According to experts at the National Institute for Economic and Social Research (NIESR), ministers could be forced to raise the state pension age to 70, increase income taxes by 15p in the pound or impose savage cuts on public spending, including NHS services.

The warning follows official figures released as part of last month’s Budget, showing that Britain will build up £175 billion of debt in 2009 and will go a further £173 billion in the red in 2010.

Tax revenue has been hit hard by the credit crunch - with rising unemployment, fiscal stimulus plans and bank bailouts also swelling government debt levels.

The NIESR report stated that, so great is the damage to the public finances, the national debt can only return to pre-credit crunch levels by 2023 at the earliest.

A contraction in UK economic output of 4.3 per cent was also predicted in the study.ADNFCR-2318-ID-19155263-ADNFCR