Britain on the Brink – Welfare Collapse Within Two Years?

An influential British think-tank, the Institute for Economic Affairs, has recently released a study in which they say that Britain faces “crippling” tax increases and cuts to welfare spending possibly within the next two years, as the elderly population continues to grow.

As the Telegraph reports:

Britain faces “crippling” tax rises and spending cuts if it is to meet the needs of an ageing population, according to the Institute of Economic Affairs.

The IEA calculated the Government would need to slash spending by more than a quarter or impose significant tax hikes because official calculations had failed to factor in future pension and healthcare liabilities. “As populations age, tax bases will grow more slowly while government spending rises faster,” its report said.

In a stark warning, the think-tank said Britain faced tax rises within just two years equivalent to more than 17pc of GDP – more than £300bn – in order to meet all future spending commitments. This is larger than the entire annual NHS budget and would increase taxes from 38pc to 55pc of national income.

The government of the United Kingdom has been a socialist madhouse for nearly a century. The left-wing Labour Party has been downright shameless in their relentless pursuit of increased welfare spending and government boondoggles. The “right-wing” Conservative Party, while paying lip-service to anti-government spending, has all but openly endorsed Britain’s left-wing welfare boondoggles over the years.

Philip Booth, the IEA’s programme director, said tax increases of this magnitude would be “impossible” to implement “without choking off economic growth and actually reducing tax revenues”.

“The underlying problem is that successive governments have made promises which can simply not be honoured from the existing tax base. The electorate is grazing a fiscal commons at the expense of future generations,” he said.

Without significant changes to spending levels, huge sacrifices will have to be made by future generations either through significantly higher taxes or reduced benefits, the report said.

The UK government, as well as nearly every other Western government, can be summed up in this phrase: Kick the can.

“Huge sacrifices will have to be made by future generations”… Do you think any politicians actually care? Of course not. All they care about is pushing off the day of reckoning until after they leave office. They only care about their political careers. If a politician publicly admitted that the government was bankrupt and just kicking the can, that politician would get booted in the next election. Voters don’t want to hear this. They want to believe that politicians can magically fudge the numbers to make the welfare state affordable. Voters get upset if politicians try to pull back the curtain on can-kicking. They don’t want their bubble burst. They want to believe. Ignorance is bliss.

Most politicians know that welfare schemes, most specifically old-age welfare schemes like Social Security and Medicare/Medicaid, are totally unsustainable. They will never admit it. They will instead continue to issue assurances and can-kicking measures that will hopefully place the day of reckoning beyond their next election. Most politicians will ignore actuarial reality in favor of perpetuating the facade.

Will Britain’s “Day of Reckoning” come within two years, as the IEA predicts? Maybe. But politicians are very skilled at kicking the can. I have no doubt that they can, and will, find some way to keep the welfare machine sputtering for at least a few more years. The deeply malevolent Bank of England always seems to have some trick up it’s sleeve. The numbers will get larger. The total government debt and deficit counts will get bigger and bigger… but as voters, we are numb to hearing these huge numbers by now. Voters will not care until it’s too late, at which time it will be obvious that politicians have lied through their teeth for decades.

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