Investing.com -- Britain will require additional tax increases or spending cuts equal to its entire education budget by early next decade to stop government debt from rising further, the Office for Budget Responsibility said Tuesday.

The independent budget watchdog’s annual review of long-term public finance sustainability found that government debt would likely enter an "unsustainable and ever-rising path" in nearly all scenarios examined.

The OBR pointed to an aging population and rapidly growing healthcare costs as primary drivers pushing public finances toward an unsustainable position, consistent with findings from previous years.

The assessment highlights fiscal challenges facing prime minister-in-waiting Andy Burnham, who has pledged to maintain the government’s current fiscal rules to reassure investors.

The OBR’s analysis shows that even if the Labour government fully implements its existing plans, these measures would not prevent debt from climbing over the longer term. This leaves limited space for additional public spending tied to Burnham’s agenda.

To maintain public debt at its current level of approximately 95% of economic output over the long term, the government would need to permanently improve the primary balance by 3.8% of economic output in the 2031/32 financial year, the OBR said. The primary balance measures the gap between revenues and expenditure excluding debt interest.

"This represents a one-year adjustment that would be around a third larger than the tightening the government plans to deliver over the coming five years, and roughly equivalent to total onshore corporation tax receipts or current departmental spending on education in 2030/31," the OBR said.

The watchdog warned that delaying such action would increase the cost of restoring sustainable public finances. Postponing measures until the 2050s would require improving the primary balance by 8% of GDP, close to the entire health budget.

If productivity growth returned to its pre-financial-crisis pace, debt would be roughly 120 percentage points of GDP lower by the mid-2070s than the baseline scenario of around 300%, and the required tightening would shrink to 1.8% of GDP.

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