Britain facing biggest jump in old age care costs in Europe

Britain faces the biggest jump in age-related healthcare spending in Europe as a result of a rapidly expanding NHS and an increasingly elderly population. 

Spending on healthcare for the elderly is on course to rise by just under 8pc of gross domestic product (GDP) over the next 50 years, official projections show – or around £200bn in today’s money.

This compares with a predicted rise of less than 1pc of GDP over the same period in Germany and around 2pc in France, where health insurance is mandatory.

KPMG’s analysis of Office for Budget Responsibility (OBR) and European Commission data said the next decade alone presented “a scale of challenges unprecedented in recent history” as the last wave of baby boomers retires just as governments face more pressure to spend on defence in the wake of Russia’s invasion of Ukraine.

The huge jump in costs will place immense pressure on public finances and Yael Selfin, KPMG’s chief economist, described the UK’s projected increase as “unsustainable”. 

She said the health service needed sweeping reform to keep it affordable and keep people healthy. The UK spent around £283bn in total on healthcare in 2022, or 11.3pc of GDP. 

Ms Selfin said: “You can already see it’s not that sustainable as things stand. So there is definitely scope to make the NHS beast more efficient.” 

An ageing population is expected to raise healthcare spending in the coming decades, given older people require more support.

The share of people in the UK aged over 65 is projected to grow from 17.8pc in 2023 to 27.5pc in 50 years, according to the OBR.

Amanda Pritchard, the NHS’s chief executive, said in June that the massive expansion of its workforces was necessary to cope with Britain’s ageing and increasingly sick population.

However, the Institute for Fiscal Studies (IFS) warned last week that a plan to hire almost a million more NHS staff over the next decade will force the Government to make “difficult decisions” on raising taxes, cutting spending or borrowing billions more.

The think-tank estimated the Treasury would have to find an extra £50bn by 2036 to fund the health service’s current expansion plans.

Ms Selfin said spending more was not the only solution: “The NHS is stretched, we have a huge backlog and waiting lists. We have a lot of burnout as well, but I’m not sure whether this model itself is perfect.

“There’s definitely more that to be done to make things more efficient, to use technology more, and to revisit the healthcare being provided.”

Health is the largest single area of UK government spending, representing around £1 in every £5 spent on all public services.

The NHS came under immense pressure during the pandemic and the health service continues to feel the impact. Waiting lists climbed to a fresh record of 7.57m in June.

KPMG’s analysis also showed the UK spent more money on direct government Covid support as a share of its economy than any other European nation.