- Chancellor Rishi Sunak wants UK budget to be surplus by 2025/26
- IMF: Britain and the United States are particularly susceptible to rising prices
- Taxes as part of national income are set to reach their highest peacetime levels
New analysis claims that if Britain’s economy performs poorly, Chancellor Rishi Sunak may have to nearly triple the planned tax increase to meet his balanced budget targets.
The Institute for Fiscal Studies has warned that deepening uncertainty remains as the economy worsens. ‘Imperfect and wildly unbalanced’ Some sectors and sectors have performed better than others.
In the upcoming autumn budget, due on October 27, the chancellor will have little room to announce new spending projects to achieve his target of a budget surplus by 2025/26, it said.
Squeeze: IFS warns Sunak may face nearly triple tax hikes from £28bn announced in March 2021 budget if economic recovery worsens
The report said spending on health, defence, foreign aid and out-of-school services would have to increase less than the UK government was planning to allocate before the coronavirus pandemic.
Sunak may also need to cut £2 billion from some ‘vulnerable’ and cash-strapped areas, such as prisons and local government, and nearly triple the tax increases from £28 billion announced in the March 2021 budget if The economic recovery gets worse.
Taxes as part of national income are already set to reach their highest peacetime level from next year, which will go towards funding the NHS and social care as a result of an increase in national insurance contributions.
Public spending is additionally projected to settle at 2 percent above its pre-pandemic levels and the highest amount since the middle of Margaret Thatcher’s second term as prime minister.
From the eccentricity point, the profile of day-to-day spending on public services is expected to grow by an average of 3.2 per cent in real over the next three years – in contrast to the decade of austerity spending cuts following the 2008-09 financial crisis.
IFS director Paul Johnson said: “The ever-increasing spending on the National Health Service and a smaller economy than projected pre-pandemic means they still lack money to spend on many other public services.”
Financial surgeries: national insurance moves towards funding the NHS and social care will send taxes as part of national income to their highest level
‘On central forecasts, after a decade of sharp cuts, there will be little or no room to increase spending on things like local government, the justice system and further education.’
However, the think tank estimates that borrowing this year could be more than £50 billion less than originally forecast and would remain at least £20 billion less than the year 2022/23, followed by a surplus over the year. will come back.
Britain borrowed a record £325 billion in the last financial year – the equivalent of 15 per cent of GDP – as the government spent heavily on health care as well as support for furloughed workers and businesses during the pandemic.
IFS forecasts were kept at their latest ‘Green Budget’ An analysis of the country’s finances based on a government green paper co-authored with Citibank.
Positive forecast: The International Monetary Fund expects the UK economy to grow at 6.8 per cent this year, the fastest recovery of any G7 country and expand to 5 per cent next year.
The report estimates that with the end of the furlough scheme, the country’s unemployment rate will rise from 4.5 percent last month to 5.5 percent by April 2022, which will improve somewhat.
Inflation is forecast to rise ‘sharply’ in the coming months before peaking at 4.6 per cent next April due to inflation and rising wages, energy prices and trade disruptions as a result of Brexit and Covid-19.
The International Monetary Fund issued further warnings on inflation today, saying Britain and the United States were highly sensitive to rising prices.
But the international body still expects the UK economy to grow at 6.8 per cent this year, the fastest recovery of any G7 country, and to expand by 5 per cent next year.