Three charts show the devastating impact that Covid lockdowns had on U.K. public finances as the Institute for Fiscal Studies (IFS) warns that neither Labour nor the Tories have any room for tax cuts or spending splurges. The Mail has more.
Labour was given a stark warning today that it will not be able to cut taxes and pump money into public services if it wins the election.
The respected IFS think-tank has poured cold water on signals from both main parties that they will ease the burden on Brits.
Keir Starmer’s allies have been hinting that income tax and national insurance could be in their sights – while the Tories are also looking at inheritance duties.
However, IFS director Paul Johnson said this morning that he is “surprised” by the speculation given the state of the public finances.
He told BBC Radio 4’s Today programme that “all of the pressure” was in the direction of spending more to shore up services, suggesting those levels could not be maintained while cutting overall taxes.
Making a New Year speech in Bristol today, Sir Keir cautioned his party that it cannot resort to the “big state cheque book” to solve problems.
But the scale of the challenge faced by politicians is laid bare in charts revealing how Covid and spiking inflation has pushed Britain towards becoming a ‘high tax, high spend’ state.
As a proportion of GDP, public spending is predicted to run well above pre-pandemic levels in the coming years, despite complaints that services are being squeezed. …
Charts produced by the Treasury watchdog [the OBR] showed how Britain struggled for years to recover from the shattering blow of the Credit Crunch, with the Coalition pushing through tough austerity measures in a bid to balance the books.
But Covid triggered a whole new level of chaos, with public spending going into overdrive as the state paid furloughed workers, bailed out stricken businesses and propped up the healthcare system.
If that was not tricky enough, the recovery phase from the pandemic saw inflation run riot around the world – and hit the U.K. particularly hard due to the open nature of the economy.
The devastating impact of the lockdowns on Britain’s finances can be seen in the following charts from the IFS.
Worth reading in full.
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