IFS: budget will be ‘work of fiction’ without clear plan to cover UK’s £35bn spending pressures
Thinktank’s influential pre-budget report urges key decisions to be made now and not put off until next year John Healey has been warned by Britain’s leading tax and spending experts that his budget risks being a “work of fiction” unless he sets out plans to cover £35bn in spending pressures. As the war in the Middle East rattles the public finances, the Institute for Fiscal Studies (IFS) said…
Britain's leading tax and spending experts have warned Chancellor John Healey that his budget for the UK risks being a "work of fiction" unless he outlines plans to cover £35bn in spending pressures. The Institute for Fiscal Studies (IFS) stated that the damage from higher inflation mandates either topping up funds for current government spending plans or imposing real-terms cuts by the end of the decade.
The IFS fears that failing to address this issue in Healey's budget on 28 October could make it appear unrealistic. Director Helen Miller cited similar criticisms leveled at former Chancellor Jeremy Hunt, who faced accusations of setting unrealistic spending plans before the 2024 general election. The IFS urged Healey to avoid a "steady as she goes" budget that delays decisions until next year's spending review.
The governor of the Bank of England, Andrew Bailey, emphasized that fiscal policy must be credible, a point echoed by the IFS. The Treasury's approach of kicking decisions forward to next year's spending review risks undermining the chancellor's credibility. The IFS argued that choosing to maintain current spending plans would implicitly allow public services to suffer real-term cuts or efficiency savings, or require tax rises or benefit cuts totaling about £35bn.
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