Public spending is set to rise from around 18% of gross domestic product to 21% by 2010, climbing to 24-25% of GDP by 2050. This will result in a tax rise to keep public debt at sustainable levels, according to economists at PricewaterhouseCoopers.
The prediction comes ahead of Gordon Brown’s 2002 Spending Review to be announced in parliament on Monday.
John Hawksworth, head of macroeconomics unit at PwC, said: ‘There is no getting away from the fact that, if people want better public services, they may eventually need to pay higher taxes to fund these services properly.
‘If sustained improvements in services are to be made, this increase in funding needs to be maintained over a longer period.’