The UK’s ageing population and huge debt have propelled it into the top 10 of countries threatened by unsustainable public finances, new research has found.
Britain is now one of 12 nations rated “extreme risk” in the Fiscal Risk Index compiled by global analysts at Maplecroft.
The UK was ranked 10th in the list of 163 countries – up from 27th last year under a slightly different method of calculating positions – because of its high public spending on health and pensions, massive borrowing and shrinking working population.
The Fiscal Risk Index identifies nations that will come under increasing economic pressure in the future because of low birth rates, high life expectancy and state commitments to look after older people. Italy topped the international league table, followed by Belgium, France, Sweden, Germany, Hungary, Denmark and Austria.
Japan came ninth, the only non-European country rated “extreme risk”, with Finland 11th and Greece 12th.
Maplecroft highlighted the UK’s soaring Government debt, up from 43 percent of GDP in 2006 to 77 percent in 2010, and relatively low number of over-65s in the workforce – only 7.71 percent compared to an average of 28 percent across all the countries surveyed.
It is forecast that by 2050 there will be 38 old people for every 100 people of working age in Britain, up from 25 now. Professor Alyson Warhurst, chief executive of Maplecroft, said: “Governments in high risk countries may need to rely on business to help them absorb the costs.”
“At the very least, governments will need the private sector to recruit and retain older workers and provide for more generous pension arrangements.”