UK faces 40 billion pound budget hole - think tank

Research organisation Resolution Foundation has estimated that tax rises and spending cuts of at least 30 billion pounds would be needed to ensure debt was falling as a share of gross domestic product by the 2026-27 financial year.

Economy 09:25 01.11.2022
Britain still faces a 40 billion pound ($46 billion) budget hole that will need to be filled by tax rises as well as spending cuts, despite recent U-turns on measures proposed during Liz Truss's short-lived premiership, a think tank has said.
 
The Resolution Foundation, which focuses on issues facing low- and middle-income households, said on Tuesday that the new Prime Minister Rishi Sunak and his Finance Minister Jeremy Hunt faced unappealing choices ahead of a budget statement due on Nov 17.
 
"While the recent focus has been on conditions improving post-Trussonomics, the central picture remains one of a weaker growth, higher borrowing costs and expensive tax cuts that have left a fiscal hole of at least 40 billion pounds to fill," the Resolution Foundation's research director, James Smith, said.
 
Britain's Office for Budget Responsibility last published borrowing forecasts in March, since when the growth outlook has weakened due to surging energy prices, while interest rates have risen in Britain and globally, pushing up borrowing costs.
 
The Resolution Foundation estimated that tax rises and spending cuts of at least 30 billion pounds would be needed to ensure debt was falling as a share of gross domestic product by the 2026-27 financial year.
 
Previous finance ministers had also left a minimum of 12 billion pounds of leeway to achieve their budget goals, the think tank added.
 
 
Increasing taxes
 
Previously the Institute for Fiscal Studies had estimated Britain faced a budget hole of 62 billion pounds in the wake of the tax-cut plan announced by Truss's finance minister, Kwasi Kwarteng, on Sept 23.
 
This "mini-budget" pushed sterling to a record low against the US dollar and forced the Bank of England to intervene in the bond market, prompting Truss to reverse some of the plans and sack Kwarteng — but too late to save her premiership.
 
The Resolution Foundation said cuts to investment spending often appealed to British governments seeking to save money — but would come at the cost of longer term growth and would raise 10 billion pounds at most.
 
High inflation meant government departments — which mostly have fixed cash budgets — are already facing 22 billion pounds of real-terms cuts by 2024-25, limiting the scope for further savings and creating pressure for extra spending, it added.
 
The government is reviewing a previous promise to raise pensions and welfare benefits in line with inflation, which will cost around 9 billion pounds.
 
Around 17 billion pounds of Truss's tax cuts remain in place, largely the reversal of a 15 billion pound rise in payroll taxes introduced by Sunak when he was finance minister.
 
"Further austerity for public services is also likely, but there are limits to how big these can credibly be," Smith said. "This reality means that the Autumn Statement is likely to involve tax rises, not just spending cuts." ($1 = 0.8692 pounds)

 


Azerbaijan takes measures to turn Khankandi into safe city - VİDEO

News line

About $7 bln of foreign direct investment was invested in Azerbaijan last year
12:00 29.03.2024
Number of people injured in Crocus City Hall terrorist attack reaches 382
11:48 29.03.2024
Media: Netanyahu rejected the Mossad Chief's proposal for a possible agreement in Gaza
11:37 29.03.2024
Azerbaijani Parliament's meeting kicks off
11:26 29.03.2024
An American couple founded a website, which identifies brands that support Israel
An American couple founded a website, which identifies brands that support Israel
11:07 29.03.2024
US scientists name infection more dangerous for brain than coronavirus
US scientists name infection more dangerous for brain than coronavirus
11:00 29.03.2024
Parviz Shahbazov: Foundations of 4 new renewable energy plants will be laid this year
Parviz Shahbazov: Foundations of 4 new renewable energy plants will be laid this year
10:50 29.03.2024
Japan eyes self-driving expressway lane network
10:40 29.03.2024
Oil prices end 1Q24 with strong growth
10:30 29.03.2024
SECRETS of the European Union's visit to the South Caucasus - Fikret Sadigov EXPLAINS
10:25 29.03.2024
Israeli strikes on Syria kill dozens, security sources say
10:20 29.03.2024
Ammunition found in Khankandi
Ammunition found in Khankandi
10:10 29.03.2024
Iran’s top diplomat: Military presence of third countries in Caspian Sea goes against interests of region
Iran’s top diplomat: Military presence of third countries in Caspian Sea goes against interests of region
10:00 29.03.2024
Armenia officially announces freezing its participation in CSTO
09:50 29.03.2024
US hopes to return to purchase of 72 fighter jets per year amid budget cuts
09:38 29.03.2024
Another 138 IDPs leave for Fuzuli
09:28 29.03.2024
Netanyahu: "We have strategic assets of Hamas"
09:17 29.03.2024
Date of next meeting of Armenian and Azerbaijani Parliament Speakers announced
09:00 29.03.2024
Russia prepares for new offensive in May-June l – says Zelensky
23:52 28.03.2024
Russian investigators have evidence of Ukraine link to Crocus terrorists
22:24 28.03.2024
Committee members of the EU Council will visit the South Caucasus region
19:48 28.03.2024
Bayern to pay Thomas Tuchel 12M euro compensation
Bayern to pay Thomas Tuchel 12M euro compensation
19:00 28.03.2024
Crocus City Hall terrorists took drugs before attack - law enforcement agencies
Crocus City Hall terrorists took drugs before attack - law enforcement agencies
18:33 28.03.2024
Azerbaijan, UN Development Program mull future co-op
18:00 28.03.2024
An Independent Trade Union Established within International Eurasia Press Fund - First in NGO sector - PHOTOS
17:39 28.03.2024
Italian PM condemns Macron for idea of sending troops to Ukraine
Italian PM condemns Macron for idea of sending troops to Ukraine
17:23 28.03.2024
Azerbaijan lends clarity to color requirement for taxis
17:02 28.03.2024
Isaac Herzog: Israel has no greater friend than US, and US has no greater friend than Israel
Isaac Herzog: Israel has no greater friend than US, and US has no greater friend than Israel
16:45 28.03.2024
Nigerian army eliminates over 200 militants in 2 weeks
16:30 28.03.2024
Armored Vehicle Coalition for Ukraine launched in Poland
Armored Vehicle Coalition for Ukraine launched in Poland
16:15 28.03.2024
Russia strengthens transport security measures after terror attack at Crocus City Hall
Russia strengthens transport security measures after terror attack at Crocus City Hall
15:55 28.03.2024
Türkiye plays an important role between Russia and Ukraine - says political scientist Ismail Cingoz
15:45 28.03.2024
2 schoolchildren detained in France on suspicion of sending bomb threats
15:35 28.03.2024
Ski resort in Georgia hit by avalanche
Ski resort in Georgia hit by avalanche
15:26 28.03.2024
Another protest against French colonialism held in New Caledonia, Azerbaijani flag raised
Another protest against French colonialism held in New Caledonia, Azerbaijani flag raised
15:15 28.03.2024
Media: US did not transfer all information about terrorist attack in Crocus City Hall to Russia
15:00 28.03.2024
Movement ‘Together’ calls on Armenia’s parliamentary forces to express vote of no confidence in Pashinyan
14:41 28.03.2024
Azerbaijan to participate in international trade fair in Istanbul
Azerbaijan to participate in international trade fair in Istanbul
14:32 28.03.2024
Le Pen accuses French government of fraud
14:22 28.03.2024
Armenian Government Grapples with Internal Division on Village Return Issue - Ishkhan Verdiyan talks on Ednews
14:12 28.03.2024
Hamısı