Retirement age up to 70!

This is one of options available to the G'ment - whatever its hue - according to the National Institute for Economic and Social Research. The influential think-tank reckons there are only three possible ways to plug the giant hole in the public finances: extend the retirement age to 70, hike the basic rate of income tax by about 15p , or slash public spending by about 10% . Either way, we'd all be feeling the pain for a long time to come...

Like most economists, NIESR reckons the Chancellor was wildly optimistic when he forecast a contraction of 3.5% this year (with a recovery in the later months). It is predicting a slide of 4.3%, which would be the economy's worst showing since 1931, during the Great Depression. It's also suggesting that unemployment won't peak until 2011, at about 3.1m (nearly 10% of the workforce); that wages will grow below the rate of inflation until 2012; and that consumer spending will keep declining until 2011. Oh, and it thinks quantitative easing is a waste of time.
As a result, it says, drastic action is required. Rather than extending the retirement age to 68 by 2046, as per the current plan, the NIESR thinks we need to extend it to 70 between 2013 (after the peak in unemployment) and 2023 - every extra year worked would reduce the deficit by 1% of GDP, it claims. However, even then we'd need to push up income tax by 8p in the pound - and without the extension, the hike would need to be more like 15p in the pound. The only other alternative is savage public spending cuts, which could mean less money for schools, hospitals and other vital services. This report by the way came out as the G'ment launched its £5 billion identity card scheme .....