The institute for Fiscal studies has said that UK chancellor George Osborne may have to find another £11billion in savings if the economy does begin to make a stronger recovery. They suggest tax increases and further cuts to services forcing UK citizens to endure more austerity misery.
The Institutes proposed cuts would come on top of the £8 billion worth of cut already set to be implemented in the government’s budget. Osborne is set to lay out his plans in his autumn statement on the 5th December. The IFS warned that the statement could bring more fiscal pain.
A Treasury spokesman said: “Action taken by the Government has cut the deficit by a quarter, whilst over a million new jobs have been created in the private sector, inflation is down, and the economy is healing.“Britain still faces economic challenges at home and abroad but the Government is taking the tough decisions needed to deal with our debts and equip our economy for the global race.”
The IFS also suggested a controversial rise to VAT with a potential increase to 25%. Some Economists have slammed the suggestion saying that such an increase will hammer already struggling households and would surely lead to a stifling of growth and would harm the UK economy even further.
In a new report, the IFS warned Mr Osborne that “the outlook for the public finances has worsened” since the Budget in March.
High rates of government borrowing this year mean there is almost no chance that Mr Osborne will meet his target for debt to fall as a share of national income between 2015 and 2016, the IFS said.
His core “fiscal mandate”, to be on course to balance the budget over a rolling five-year period, is also in jeopardy.
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