Tax cuts may have to be scrapped due to 'economic bind', warns IFS

Tax cut promises may need to be scrapped as a result of the UK being in an 'unfortunate economic and fiscal bind', the Institute for Fiscal Studies (IFS) has warned.

The next government is likely to face some of the most difficult economic and fiscal choices the UK has faced outside of pandemics, conflicts and financial crises, according to an IFS report.

The IFS said that a combination of high debt interest payments and low expected growth is forecast to make it more difficult to reduce debt as a fraction of national income than in any parliament since at least the 1950s.

The think tank also warned that whilst tax rises and cuts for public services are built into current government plans, public services are 'showing signs of strain' and are 'performing less well than they were in 2010'.

IFS Director Paul Johnson said:

'Now more than ever, as a country, we face some big decisions and trade-offs over what we want the state to do and how we're going to pay for it. Those looking to form the next government should be honest about these trade-offs.

'If they are promising tax cuts, let's hear where the spending cuts will fall. If they are going to raise, or even protect, spending, they should tell us where taxes will rise. Or parties might think that further increases in government debt are justified: in which case they should make the argument for why debt should be rising.

'If to govern is to choose, then to campaign should be to present clear choices and trade-offs to the electorate. If the parties don't do that clearly and honestly over the next year, we at IFS will do what we can to plug that gap.'

Internet links: IFS website

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