IFS warns that Budget is a ‘gamble’

Modesto Morganelli
Ottobre 31, 2018

Chancellor Philip Hammond has taken a gamble with the public finances, with a one in three chance of failing, a leading economic think tank has warned.

Speaking of Mr Hammond's decision to take advantage of last-minute improvements to borrowing forecasts by the Office for Budget Responsibility (OBR) to fund increased spending on the NHS, Mr Johnson said: "Now we know".

Financial thinktank the Institute for Fiscal Studies has been crunching the numbers in the Chancellor's 2018 Budget, announced on Monday.

Improved deficit and upgraded growth forecasts allowed the Chancellor to loosen the purse strings, releasing more than £100billion to cut taxes and increase spending.

Philip Hammond's giveaway Budget has increased speculation about the possibility of an early general election.

The tax will be created to ensure established tech giants, rather than start-ups, shoulder the burden, Hammond told parliament.

Perhaps the biggest question is "why Hammond sought to bring forward tax giveaways via raising the thresholds", says Sky News's Ian King, who notes that "these are the kind of things that are normally done by a chancellor in an election year". More than half think their finances will be the same.

The true basic rate of tax is 32 per cent, 20 per cent income tax plus 12 per cent NI, while above the higher rate threshold it is 42 per cent, 40 per cent income tax plus 2 per cent NI.

The Chancellor sought to reassure voters and shore up the morale of the fractious Tory MPs Theresa May needs to back her Brexit deal by peppering his speech with spending pledges and a surprise income tax cut, The Guardian reports.

Johnson's comments follow "end of austerity" plan announced on Monday by the United Kingdom finance minister, Philip Hammond, as he delivered his budget statement in the Parliament.

Will the better news on the public finances and high levels of employment be maintained?

IFS director Paul Johnson said that Mr Hammond's Budget could be seen as an "end to austerity" only on a narrow definition of the term.

Mr Mackay said he would make his position on income tax clear when he presents the Scottish budget to MSPs.

"This is no bonanza - many public services are going to feel squeezed for some time to come", Johnson said.

"We'd reverse some of the corporation tax cuts".

"If I were a prison governor, a local authority chief executive or a headteacher I would struggle to find much to celebrate".

"While this [£20bn for the NHS] spending commitment addresses significant political pressure that has built up over the years, it does not address the fundamental long-term weakness of United Kingdom fiscal policy that comes from healthcare spending", Moody's said.

Day-to-day spending on all other public services, such as education and police, is set to be "essentially flat", said Johnson, continuing a long-term trend.

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