Taxes rises of £30bn to cut deficit ‘needed by mid-2020s’

Tim Tabor/flickr

(qlmbusinessnews.com via bbc.co.uk – – Wed, 14 Mar 2018) London, Uk – –

Taxes will need to rise by £30bn per year by the mid-2020s if the government wants to keep spending constant and balance its books, a think tank warns.

The Institute for Fiscal Studies added that dismal productivity, earnings and GDP growth had become the “new normal”.

It comes after the chancellor unveiled upgraded growth and borrowing forecasts in the Spring Statement on Tuesday.

Philip Hammond said the UK economy had reached a turning point and there was “light at the end of the tunnel”.

The chancellor told MPs growth was now forecast to be 1.5% in 2018, up from 1.4% forecast by the Office for Budget Responsibility in November.

Debt is also expected to fall as a share of GDP from 2018-19, the first drop in 17 years.

However, Paul Johnson, director of the Institute for Fiscal Studies (IFS), said that “nothing much” had changed on Tuesday.

He said the good news on borrowing would “largely wash out” over the next few years, while the structural deficit in 2019-20 would be almost unchanged.

He also said the latest growth projections remained “very subdued”.

“The reality of the economic and fiscal challenges facing us ought to be at the very top of the news agenda.

“And I mean the reality, not the spin and bluster of politicians on all sides pretending there are easy solutions.”