Counting the cost of ‘baby boom’ Britain
Assessing the debt the baby boomers’ generation (born 1945 – 1965) is leaving behind has become a minor cottage industry. Today a mighty economist of no small public interest waded in.
Martin Weale sits on the Monetary Policy Committee of the Bank of England making him one of the most influential people in the country. He’s been labelled a bit of a hawk (eyeing early interest rate rises a little more keenly than some of his fellow MPC members). Read his paper published by the economic research centre he used to run, NIESR, and you might understand why.
The burden of providing for the Baby Boomers in old age falls on a smaller, poorer generation and, to boot, a generation that inherits massive debts. Professor Weale estimates (look away now if you are squeamish) that the inter-generational debt being passed on is £7.8 trillion.
Put that another way (a much better way, the economists argue), Professor Weale thinks that even assuming that George Osborne’s deficit reduction plan happens on schedule, you STILL have to cut the equivalent of 6-6.5% of GDP in spending or raise it in taxes… something approaching the scale of the consolidation all over again.
What does all this mean? It means belt-tightening carries on when 2015 passes. At nothing like the pace of the post banking crisis consolidations (Osborne’s or Darling’s) but through state spending reductons (health is the one some economists eye most closely), higher taxes, working longer and longer into old age or some gruesome cocktail of the lot. We have a piece on tonight at 7pm.
Me? I’m amongst the last of the baby boomers – born 1965 (March the 15th – not that you asked).