William Eichler 16 October 2018

Whitehall must spend £19bn annually to end austerity

Theresa May’s promise to bring an ‘end to austerity’ is incompatible with the chancellor’s aim of balancing the books by the mid-2020s, financial experts say.

At this year’s Tory conference, the Prime Minister pledged to end the last eight year’s of Government cuts - cuts which have taken their toll on councils and frontline services.

However, the Institute for Fiscal Studies (IFS) has today published research that brings into question whether ending austerity and dealing with the country’s deficit were compatible aims.

The IFS study suggests an additional £19bn a year by 2022–23 would be required to fulfil the promises of both the PM and Philip Hammond. And even if this were possible, the think tank says, there would still be £7bn of cuts ‘working their way through the system.’

‘The decision over the spending review envelope will probably be the biggest non-Brexit related decision this chancellor will make,’ said Paul Johnson, director of the IFS.

‘He has a big choice. He could end austerity, as the Prime Minister has suggested. But even a limited definition of what that might mean would imply spending £19bn a year more than currently planned by the end of the parliament.

‘An increase of that size is highly unlikely to be compatible with his desire to get the deficit down towards zero. Alternatively, the Chancellor could stick to his guns on the deficit and leave many public services to struggle under the strain of a decade and more of cuts.’

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