TUC: IFS report shows Osborne 'failing on all counts'
Commenting on the Institute for Fiscal Studies' report that the "era of austerity" could last until 2018, the TUC claimed it shows Chancellor George Osborne's economic strategy is "failing on all counts".
TUC General Secretary Brendan Barber said:
The UK should be on the road to recovery by now. Instead we could be set for a prolonged period of debilitating austerity well beyond the next election.
The Chancellor should use his Autumn Statement next week to change course. Sadly he looks set to drive the economy even faster in the wrong direction.
Deputy Director of the Institute for Fiscal Studies (IFS) Carl Emmerson said that since the last Budget, the UK's economic outlook has "deteriorated" and Government receipts have "disappointed".
Mr Emmerson suggests that as a result, Chancellor George Osborne might find himself having to "abandon" one of his fiscal targets.
If much of the additional weakness this year feeds into a permanently higher outlook for borrowing, then in order to comply with his other fiscal target Mr Osborne would need to announce yet more tax rises or spending cuts for the next parliament in next week's Autumn Statement.
In that case the planned era of austerity could run for eight years - from 2010/11 to 2017/18.
IFS warns era of austerity 'could last until 2018'
A well respected economic think tank has warned that the "era of austerity" could last until 2018 as the Chancellor is forced to extend spending cuts still further into the next Parliament.
The Institute for Fiscal Studies (IFS) said in a report that George Osborne may have to extend the current squeeze on public spending to 2017/18 and find another £11 billion from cuts or tax rises on top of the further £8 billion reduction in welfare spending already discussed.
Under the think tank's "relatively pessimistic" scenario for Britain's economic future - which sees the recent deterioration in growth prospects and tax receipts turn out to be permanent - Mr Osborne will be forced to announce even more bad news in order to meet his "fiscal mandate".
The report comes ahead of the Chancellor's Autumn Statement next week, and the IFS predicts that he is set to miss his other fiscal target - for the national debt to come down in 2015/16.
However, its analysis does not take into consideration the recent change to the way the Government finances interest payments on debt from the Bank of England's gilt purchases, which is expected to make the so-called supplementary fiscal target easier to meet.