In its latest policy document, the Organization for Economic Cooperation and Development (OECD) warned that the world is likely to face enormous fiscal difficulties in the coming decades, worse than the bulky public debt seen during the Covid-19 pandemic.
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“According to your long-term scenario, a slowdown in large emerging economies, demographic change and slowing productivity gains will drag the growth trend between the 38 members of the OECD and the nations of the Group of 20 to 1.5% in 2060 from around 3% today. “
“At the same time, states will face rising costs, particularly of pensions and health care“.
“To maintain public services and benefits while debt stabilizes in that environment, governments would have to increase revenues by almost 8% of gross domestic product.”
“Secular trends such as an aging population and rising relative prices of services will continue to put pressure on government budgets.”
“The tax burden of these long-term trends dwarfs that associated with the public debt inherited from Covid.”
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