The Office for Budget Responsibility has produced an alarming new report about the state of the public finances. They offer projections over 50 years, mainly 2024 to 2074, which seem to suggest that the economy will be faced with insurmountable debt and a disastrous state of public finance. The main factors they consider are the impact of climate change, demographic change, the growing cost of health care and the cost of maintaining massive public debt.
Don’t panic. These are projections, not predictions, and a projection simply takes a present trend and follows it outward. Forecasters are supposed to use discount rates, to allow for uncertainty; this report doesn’t do that. Some of the startling figures in these projections, particularly those related to climate change, are based on wild guesses. The projections assume no changes in policy of any kind, no changes in the pattern of economic production, the same social codes, the same consumer behaviour, and so on. This is the same process that led the Times in 1894 to write that “in 50 years, every street in London will be buried under nine feet of manure.” As a prediction, it’s horse manure.