In a report titled The Government Debt Iceberg, Cato Institute senior fellow Jagadeesh Gokhale asserts that to fund future pension and social care obligations, the government will need to cut spending by more than a quarter, cut health and social protection spending by half, or impose a significantly higher tax burden on those still able to work.

Professor Philip Booth, editorial and programme director at the IEA, said: “Without reform, today’s young people are likely to be disappointed, either in terms of higher tax rates or in terms of reduced future benefits provided by government.

“The quicker the government changes policy, the more painlessly the situation will be resolved. For too long people have voted themselves benefits to be paid by the next generation of taxpayers, not by sacrifices that they will make themselves.”

The IEA has called for the government to do more to ensure that individuals save for future pension and healthcare costs themselves, asserting that governments will sink into a mire of undermined investment opportunity and reduced growth potential if they do not address their fiscal imbalances.

Without significant changes to spending levels, the report holds, huge sacrifices will have to be made by future generations through higher taxes or reduced benefits.