The Institute for Fiscal Studies has slammed George Osborne’s spending plans, revealed in this week’s Autumn Statement.
The IFS said there is just a 50 per cent chance Osborne will hit his targeted surplus of £10.1bn by 2019/20, describing it as a “completely inflexible” plan.
The IFS said Osborne had been “lucky” that lower debt payments and higher forecast tax revenues had helped him to avoid making deeper cuts to budgets.
IFS director Paul Johnson says: “This is not like the friendly, flexible fiscal target of the last parliament, which allowed him to accept a bigger deficit when growth and tax revenues disappointed. This is fixed, four years out.
“The forecasts will change again, and by a lot more than they have over the past few months. If he is unlucky – and that’s almost a 50-50 shot – he will have either to revisit these spending decisions, raise taxes, or abandon the target.”
Johnson says the spending review was “one of the tightest in post war history” and it was not the end of austerity.
“Total managed expenditure is due to fall from 40.9 per cent of national income in 2014-15 to 36.5 per cent in 2019-20. A swathe of departments will see real-terms cuts. The 3 per cent cumulative increase in health spending over the next five years is not far off the average annual increase in spending in the last 50 years,” he adds.