IFS issues warning over further spending cuts
05 Feb 2015
The UK is set to experience deeper spending cuts in the next Parliament as the UK plans the ‘largest fiscal consolidation of 32 advanced economies’, the Institute for Fiscal Studies (IFS) has warned.
The IFS’s Green Budget, which provides an annual analysis of the UK’s finances in the run-up to the Spring Budget, has revealed that further spending cuts of £51.4bn would be required over the course of the next Parliament in order to meet plans set out in the Autumn Statement, compared with an estimated £38.3bn of spending cuts in this Parliament.
According to the report, tax receipts are on course to be 1% lower in 2019/20 than they were in 2007/08, while spending cuts have to date been significantly lower than originally planned.
Commenting on the findings, IFS director Paul Johnson said, ‘Mr Osborne has perhaps not been quite such an austere Chancellor as either his own rhetoric or that of his critics might suggest’.
‘The public finances have a long way to go before they finally recover from the effects of the financial crisis.’
In a bid to reduce the need for significantly deeper public spending cuts, the organisation has suggested a number of measures aimed instead at reducing the social security budget, which include uprating the basic State Pension in line with inflation, abolishing Child Benefit for families not in receipt of Universal Credit, and requiring all tenants to pay at least 10% of their rent.
The IFS predicts that all three of the main UK political parties would raise taxes and exceed their borrowing plans following the General Election in May.