Fiscal sustainability report – July 2018

Our 2018 Fiscal sustainability report sets out long-term projections for spending, revenue and financial transactions, and assesses whether they imply a sustainable path for public sector debt.

Click here to explore the long-term projections in our interactive tool

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Fiscal sustainability report – July 2018

July 17, 2018 – 1.74 MB

The structure the report is as follows:

  • Chapter 1: sets out the framework we use in this report to analyse fiscal sustainability;
  • Chapter 2: analyses the fiscal consequences of past government activity through alternative measures of the public sector balance sheet;
  • Chapter 3: analyses the fiscal consequences of future government activity through long-term projections of revenue and expenditure; and
  • Chapter 4: considers summary indicators of fiscal sustainability.

Over the years, we have presented further material in FSR annexes and via supplementary tables. In this FSR, as well as the usual supplementary material below, the report includes two annexes.

  • Annex A: looks at how demographic trends have been incorporated in our central population projection and considers how alternative assumptions might affect the size and structure of the UK population; and
  • Annex B: considers the implications for fiscal sustainability of factors that could affect the long-term costs of long-term care.

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Supporting documents

Presentations

Boxes

Within each of our key publications we include topical ‘boxes’. These self-contained analyses are unique to this publication and tend to cover recent developments in the economy or public finances that complement the main discussion of our analyses.

Productivity growth in the long-term

Productivity growth in the long-term
In our November 2017 EFO, we revised down our forecast for trend productivity growth so that it reached 1.2 per cent a year at the end of the medium-term horizon. For the purposes of the long-term projections in our 2018 FSR, we assumed that productivity growth would rise beyond the medium term to reach 2.0 per cent a year from 2030-31 onwards. In this box we provided context for our long-term assumption by exploring the rises and falls in UK productivity growth over the past two-and-a-half centuries.

Economy categories: Productivity, Labour market

Reviews of the State Pension age

The Government commissioned two reports published in 2017 to inform its review of the State Pension age (SPA): an independent review by John Cridland and a report by the Government Actuary’s Department (GAD). This box summarised the key findings from these two reports.

Fiscal categories: State pension, Public spending, Welfare spending

Cross-cutting categories: Pensions

Age-related spending in Europe

Age-related spending in Europe
Our 2018 long-term fiscal projections suggested that, if left unaddressed, the public sector finances would come under increasing pressure over the next 50 years. This box compared our long-term age related spending projections over the period from 2025 to 2065 with those presented in the European Commission's 2018 Ageing Report.

Fiscal categories: State pension, Public spending, Departmental spending, Welfare spending, Health, Education

Cross-cutting categories: Pensions, Ageing population, Demographics

Period and cohort measures of fertility and mortality

Period and cohort measures of fertility and mortality
The population projections used to produce our long-term fiscal projections are underpinned by projections for age-specific fertility and mortality rates. In this box we considered two different ways of summarising trends in these rates - period and cohort metrics - and discussed their relative advantages.

Economy categories: Population and migration, Labour market

Cross-cutting categories: Ageing population, Demographics

Demographics of the constituent nations of the UK

Demographics of the constituent nations of the UK
This box looked at differences in the Office for National Statistics’ population projections for the four constituent nations of the UK. It discussed the nations’ relative size and ageing, and possible implications for fiscal sustainability.

Economy categories: Labour market, Population and migration

Cross-cutting categories: Devolution, Ageing population, Demographics