Chancellor has 'little room for manoeuvre' in the Budget

13 Oct 2021

Chancellor Rishi Sunak will have 'little room for manoeuvre' in this month's Budget and Spending Review, according to the Institute for Fiscal Studies (IFS).

The IFS says that this year's historic announcements of tax rises will increase the UK's tax take to its highest sustained level in peacetime.

The think tank says these are more the inevitable consequences of population ageing and pressures on health and care spending than they are consequences of the coronavirus (COVID-19) pandemic.

However, despite improved economic forecasts, to meet his stated objective of achieving current budget balance, the Chancellor will have to increase spending on services other than health, defence, schools and aid by less than he was planning pre-pandemic, the IFS added.

Additionally, government borrowing this year could be more than £50 billion lower than was forecast in the March Budget.

Paul Johnson, Director of the IFS, said: 'Rishi Sunak, a Conservative chancellor, is presiding over an increase in the tax burden to record levels in the UK and an increase in the size of the state (public spending as a fraction of national income) to levels not seen since the days of [Margaret] Thatcher.

'Yet the combined effects of ever-growing spending on the NHS and an economy smaller than projected pre-pandemic mean that he is still likely to be short of money to spend on many other public services.'

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