Pensions pose risk of future economic downturns
The UK’s pension liabilities place the country at risk of further economic crises, it has been claimed.
High public spending on pensions and health, along with the size of the national debt, have propelled the UK up to tenth in the fiscal risk index compiled by global analysts, Maplecroft.
The Index is designed to isolate those economies that face growing threats to their wellbeing because of high life expectancy, state commitments to pensions and declining birth rates.
The UK was joined in the top ten nations most at risk by France, Germany, Italy and a number of other European countries. The only non-European country near the top of the index was Japan.
Maplecroft’s analysis pinpointed UK public debt, which climbed from 43 per cent of GDP in 2006 to 77 per cent in 2010, and the relatively low number of over-65s in the workforce, just 7.71 per cent compared with an average of 28 per cent across all the countries surveyed, as warning signs.
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.”