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ECONOMISTS lambasted Chancellor Rishi Sunak’s spending plans today, warning that proposals to address Britain’s battered public finances “do not look deliverable.”
The Institute for Fiscal Studies (IFS) said the biggest tax-raising Budget for 28 years has made the Chancellor look less like “Santa Sunak” and “more like Scrooge Sunak.”
Mr Sunak is largely funding a mammoth £50 billion squeeze by freezing income tax allowances and hiking corporation tax in “screeching U-turns on Conservative policy,” the economic think tank said in its damning analysis of Wednesday’s Budget.
It said the corporation tax increase from 19 per cent to 25 per cent by 2023 was a “gamble” but would not have a bad effect on much-needed business investment.
However the IFS said Mr Sunak had been “silent” on long-term recovery plans to address the future consequences of the pandemic.
IFS director Paul Johnson said: “This was, of course, a tale of two Budgets.
“By the end of the forecast period we are looking at a fiscal tightening of over £30bn relative to previous plans.
“Take account of the cuts to planned spending announced in the autumn and Santa Sunak, purveyor of billions, today looks more like Scrooge Sunak, cutting spending and raising taxes to the tune of nearly £50bn relative to his pre-pandemic plans of March 2020.”
He said the Chancellor’s spending plans look “implausibly low” and questioned whether it was realistic to assume spending on the NHS from next year will not be more than before the crisis.
And he warned that Mr Sunak was unlikely to meet his goals, “at least not without considerable pain.”
“How he is actually going to fix the public finances remains to be seen,” Mr Johnson said.
The IFS said freezing the income tax threshold would raise around £9bn, while the corporation tax changes could see revenues rise by more than £17bn by 2025.
If spending plans and tax hikes go as planned, the government will be able to balance the books by 2025, according to the IFS.
“The sad truth is that that would be a balance built on the highest sustained tax burden in British history and yet further cuts in unprotected public service spending,” Mr Johnson added.
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