The effects of an ageing population have been well documented – not just in this paper but across the media as a whole. As we, as a nation, are getting older, and as the population increases the strains on both the welfare and health budgets are there for all to see.
So who is going to pay for this? A recent report from the Office for Budget Responsibility, which is responsible for assessing the long term sustainability of the public finances, has predicted that spending on the State Pension, social care and health care will rise from around 14% of the UK’s GDP now to nearer a fifth by the year 2063. This is a 50 year ‘ticking time bomb’ that shows the level of pressure that our ageing population is likely to place on the public purse.
To further compound the problem, the Office for National Statistics has recently predicted that the UK’s population will rise by some 9.6 million to reach an estimate of 73.7 million by 2037. Some 60% of this increase – equivalent to around 5.8 million people, is linked to immigration.
But it is exactly this increase in population and immigration, the report says, that can help to increase the overall number of people who are in work in the UK – and by doing so help to improve the public finances. It goes on to say that overall migration into the UK has a ‘positive impact on the sustainability of the public finances’.
To put this issue in perspective, the OBR estimates that, at current levels, the Government will need to introduce spending cuts or tax rises of around £19billion by 2019 – but that positive economic migration can help to ‘bridge’ this funding gap going forward.