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UK budget risks being a fiction without plan to fund £35bn pressures
The Institute for Fiscal Studies said funding the pledge to lift defence spending to 3% of GDP by 2030 would require tax rises or benefit cuts of about £35bn.
The Institute for Fiscal Studies warned that the UK budget risks becoming a “work of fiction” if Chancellor John Healey does not set out a clear plan to cover about £35bn in spending pressures. The thinktank said key decisions should be made now rather than delayed until next year.
The IFS tied the pressure to higher inflation, saying it has rattled public finances and may force either top ups for existing government spending plans or deep real terms cuts by the end of the decade.
According to the report, compensating for the inflation shock and funding the pledge to raise defence spending to 3% of GDP by 2030 would require tax rises or benefit cuts of about £35bn, amid a febrile backdrop in the bond market.