UK may need €69bn in tax increases to balance the books after Covid crisis        

Warning from Institute for Fiscal Studies sets the tone for the UK's budget on March 3

Chancellor of the Exchequer Rishi Sunak is due to outline how he intends to address the ruinous legacy of a pandemic.

The UK could need tax increases of about £60bn (€69bn) if chancellor of the exchequer Rishi Sunak wants to balance the books, according to the Institute for Fiscal Studies (IFS).

The warning sets the tone for the UK's budget on March 3, when Mr Sunak is due to outline how he intends to address the ruinous legacy of a pandemic that has driven government borrowing to its highest in peacetime and forced him to deliver 13 emergency statements since he took office a year ago.

“It is possible that growth will be fast enough that big fiscal deficits will largely dissipate of their own accord,” said Paul Johnson, director of the IFS. “But that is not a central expectation. More likely, we are on track for ongoing unsustainable deficits. A reckoning in the form of big future tax rises is highly likely, but not as yet inevitable,” he said. 

The analysis, based on forecasts by Citigroup, indicates the scarring left by the deepest slump in three centuries may be worse than the Office for Budget Responsibility predicted in November. 

However, the IFS said now is not the time to be trying to fix the public finances, urging Mr Sunak to bolster the recovery first.

The report conceded that the outlook now is not much clearer than it was in November. 

Bloomberg