The Institute for Fiscal Studies has published a new report on the fiscal challenges facing whichever party forms the next government after the 4 July 2024 general election. With both main parties committing to reducing the national debt, and latest forecasts suggesting that the government will need to run a surplus in order to see debt falling (i.e. raising more in tax and other revenues than it spends on everything other than debt interest – a position the UK has not been in for over 20 years), the IFS identifies three broad options.
continue with spending cuts in line with existing plans;
raise taxes; or
borrow more.
Commenting on the report, Paul Johnson, Director of the IFS, said: ‘Money is tight. Public services are creaking, taxes are at historically high levels, and both parties are hemmed in by their very clear pledges to get debt falling. It is only falling, marginally, on current forecasts, because tax rises and spending cuts are already baked into baseline forecasts. To avoid cuts to key public services in the post-election Spending Review would require further tax rises. Promising tax cuts would mean even sharper cuts to struggling public services.
‘We could get miraculously lucky with growth and escape having to make these tough choices. But we might not. Just because thousands of English and Scottish football fans are crossing their fingers and hoping for the best this summer doesn’t mean that the next Cabinet should do the same.’
The Institute for Fiscal Studies has published a new report on the fiscal challenges facing whichever party forms the next government after the 4 July 2024 general election. With both main parties committing to reducing the national debt, and latest forecasts suggesting that the government will need to run a surplus in order to see debt falling (i.e. raising more in tax and other revenues than it spends on everything other than debt interest – a position the UK has not been in for over 20 years), the IFS identifies three broad options.
continue with spending cuts in line with existing plans;
raise taxes; or
borrow more.
Commenting on the report, Paul Johnson, Director of the IFS, said: ‘Money is tight. Public services are creaking, taxes are at historically high levels, and both parties are hemmed in by their very clear pledges to get debt falling. It is only falling, marginally, on current forecasts, because tax rises and spending cuts are already baked into baseline forecasts. To avoid cuts to key public services in the post-election Spending Review would require further tax rises. Promising tax cuts would mean even sharper cuts to struggling public services.
‘We could get miraculously lucky with growth and escape having to make these tough choices. But we might not. Just because thousands of English and Scottish football fans are crossing their fingers and hoping for the best this summer doesn’t mean that the next Cabinet should do the same.’
