IMF to Britain: Charge for health care, raise retiring age to escape debt crisis

by Alex Brummer
Daily Mail [UK]
2 October 2009

Gordon Brown was warned last night to raise the retirement age above 65 and introduce NHS [National Health Service] charges to tackle the soaring state deficit.

In a devastating intervention, the International Monetary Fund called for radical changes to the pension system and spending cuts that go far beyond the plans outlined by the Prime Minister this week.

The global watchdog said root and branch changes to public sector spending would be necessary to ‘help keep a lid on the debt’ and restore financial stability.

The public reprimand will rekindle memories of the humiliation of the Callaghan government in 1976 when the IMF forced massive budget cuts on Britain to deal with the collapse of the pound.

Treasury ministers privately admit that the budget deficit is expected to rise to £200billion [$319 billion US] this year – £25billion more than the Chancellor predicted in the Budget.

That is the equivalent of £3,257 [$5,209.00 US] of debt for every man, woman and child, or £9,457 for the average family [$15,125.00 US].

Oliver Blanchard, the IMF’s top economist, told a press conference at a joint annual meeting with the World Bank that the next British government will ‘have to take measures that improve the medium-term debt outlook’.

He added: ‘That means reforms of the retirement system, that means reform of the healthcare system.’

The IMF said that radical reform of pensions should lead to a rise in the national retirement age from 65 and save billions of pounds.

And they called for politicians to target ‘unfunded’ final salary public-sector pension schemes which will potentially cost the the Exchequer up to £1trillion.

Mr Blanchard said reform was vital, adding that it would be ‘a joke’ if the Government settled instead for new fiscal rules that might be torn up at times of crisis.

The IMF estimated that by next year Britain’s debt will represent 81.7 per cent of output.

Even with planned cuts and tax increases, it predicted a figure of 98.3 per cent by 2014.

The article continues here.

Comments are closed.