The squeeze on public spending and tax rises pencilled in by the Treasury for the coming decade will fail to stabilise the public finances, a new report argues on Thursday, because officials have overlooked their own analysis of the costs of an ageing population.

PwC, the professional services firm, calculates that additional tax increases or public spending cuts worth between £25bn and £43bn in current prices are needed by 2017-18 to prevent public sector debt exploding at an uncontrollable rate.