Generational accounting in the UK

This paper presents the first set of generational accounts for the United K ingdom. We find that under our baseline scenario, in which pensions are pri ce indexed and health expenditure grows modestly, the imbalance in UK gener ational policy is small when compared with other leading industrial countri es like the United States,Japan, and Germany. However, under an alternative policy scenario, where ail social benefits are wage-indexed and health car e spending is increased, there is a larger fiscal bill left for future gene rations to pay. In this case, achieving generational balance would require much stronger medicine.