The Government will need to introduce a tax increase of £41bn per year to keep government spending stable, whilst also achieving Chancellor Philip Hammond’s targets, according to the Institute for Fiscal Studies (IFS).
Hammond donned an optimistic, “tiggerish” tone in his Spring Statement on Tuesday, and reported slightly lower borrowing forecasts compared to November’s Budget.
However, IFS director Paul Johnson said that the Chancellor’s confidence was “misplaced”.
IFS analysis illustrates that continued spending on a flat proportion to GDP, and cutting the deficit between spending and borrowing to zero will require a tax increase of £30bn per year.
Furthermore, additional demographic pressures could add £11bn per year to spending, in order to maintain the current quality of social care and health services, the IFS said.
The current deficit forecast for this fiscal year is £45.2bn.
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