Britons will have to work until they are at least 70 or face a 15p hike in income tax for the Government to rein in its ballooning national debt, according to a report today.

Britons will have to work until they are at least 70 or face a 15p hike in income tax for the Government to rein in its ballooning national debt, according to a report today.

The UK's battered public finances are in such a state following action to ease the recession and banking crisis that the country has few options to get the balance sheet under control, the National Institute of Economic and Social Research (NIESR) said.

It claimed the Government would have to make a choice between forcing people to work longer by upping the state pension age from 60 for women and 65 for men to 70, or introducing unpalatable tax increases or public spending cuts.

While the retirement age is already set to increase to 68 by 2046, the report warned this would not be enough and said that basic rate income tax would have to rise by 15p in the pound if the state pension age was not increased further.

Even if the retirement age was upped, basic rate tax may have to increase by as much as 8p.

A third option would be to slash public spending on services such as the NHS and education by a tenth.

Ray Barrell, a senior research fellow at the NIESR, said the least drastic option would be to increase the retirement age - a move that could pay off 20% of UK debt within 14 years.

"We have got the option to pay more tax and consume less while we are working and have a long retirement, or pay less tax and consume more while working and have a shorter retirement," he said.

"We as a country need to decide," he added.

Each additional year-and-a-half of working life reduces the Government's borrowing needs by at least 1% of GDP, the NIESR estimates.

Public borrowing is already expected to soar to a record £175 billion this year after the Government broke its rule to keep borrowing within 40% of GDP as the recession took hold.

The NIESR gives a grim prediction that the Government's debt stock will rise to around 100% of GDP.

Its forecast for the economy is also more pessimistic than that offered by the Chancellor in his recent Budget, with the Institute forecasting a contraction of 4.3% this year and a weak recovery of 0.9% growth in 2010.