Register for Digital Look

Britons face decades of high taxes after govt 'own goals' - IFS

By Frank Prenesti

Date: Friday 18 Nov 2022

Britons face decades of high taxes after govt 'own goals' - IFS

(Sharecast News) - Britons will face "several decades" of high taxes as a result of "own goals" on economic policy by successive Conservative governments, an influential think tank said on Friday.
Responding to Finance Minister Jeremy Hunt's autumn budget containing £55bn of tax rises and public spending cuts, the Institute for Fiscal Studies (IFS) said the UK had "just got a lot poorer".

Living standards will fall by 7% to their lowest levels since records began - wiping out eight years of growth in the process as wages fall well behind surging inflation and interest rates.

In stark terms, real disposable incomes will be at 2013 levels, according to the independent spending watchdog the Office for Budget Responsibility.

"Our tax burden is going to settle at its highest level in history. Post-election spending plans are actually pretty austere, that's a pretty nasty place to be, high borrowing, high debt, high tax and public spending under strain," said IFS director Paul Johnson.

"How are all of those things consistent with one another? Part of the answer to that lies in the fact that we all got just a whole lot poorer."

He added that the "extraordinary" scale of expected spending on debt interest - forecast to double at £100bn a year by 2027 - would also inhibit growth.

Hunt admitted on Thursday that the UK was already in a recession that is expected to last more than a year and reduce economic output by 2%.

He also gambled on the government's electoral chances at the next election, due in 2024, by deferring austerity spending cuts for after any expected poll.

Johnson said he would be "most surprised" if the tax burden fell to long-term, pre-Covid averages "any time in the next several decades".

"Higher taxes, a bigger state look to me to be here to stay. Beyond the next two years, all the spending numbers should be taken with a very large pinch of salt, after all they are pencilled in for after the next election," he said.

"If they are kept to, they will mean most public services. I have to say that it's unlikely that they will actually be kept to. I would be willing to wager quite a considerable sum that spending will turn out higher than planned. It literally always does."

Johnson said "slashing" investment spending after the bank-induced financial crash of 2008 by then finance minister George Osborne - the architect of austerity measures that are forecast to last a generation - was "not a good way to get growth.

"Very clearly Brexit was an economic own goal....economically speaking that has been very bad news indeed and continues to be bad news, particularly the way that we've done it, the hard Brexit...distancing ourselves from the (EU) single market."

Reporting by Frank Prenesti for


Email this article to a friend

or share it with one of these popular networks:

Top of Page