Britain's Hunt delayed 'properly tough' budget decisions, says IFS think tank 

UK chancellor of the exchequer Jeremy Hunt: 'He may hope that things will look better by then, or perhaps that it will be somebody else's problem.'

British chancellor Jeremy Hunt appears to have delayed the "properly tough" decisions needed to balance the public finances, possibly in the hope of an economic upturn that will reduce the need for a painful squeeze, a think-tank has said.

"Hemmed in by rising interest payments and poor growth prospects, the chancellor decided to allow borrowing to rise, and to put off properly tough decisions for another couple of years," Paul Johnson, director of the Institute for Fiscal Studies, or IFS, said. 

"He may hope that things will look better by then, or perhaps that it will be somebody else's problem," he said.

Hunt announced £55bn (€48bn) of fiscal tightening on Thursday to take full effect by the financial year 2027/28.

But while taxes will start to rise immediately, almost all spending cuts will be delayed until after 2024, when the next general election is expected. 

The IFS said Hunt's spending plans from 2025 looked "implausibly tight".

Britain's opposition Labour Party has a large lead over prime minister Rishi Sunak's Conservatives, which grew significantly after fiscal plans from Mr Sunak's predecessor, Liz Truss, sparked market turmoil in September and October.

Britain's Office for Budget Responsibility forecast tax as a share of GDP would rise to over 37% of national income in five years' time from about 33% now — the highest sustained level since the Second World War, though still low by most European standards.

'New era' of higher taxes

Mr Johnson said he expected the "new era" of higher taxes would prove permanent.

"I would be most surprised if the tax burden gets back down to its long term pre-Covid average at any time in the coming decades. Higher taxes look to be here to stay," he said.

Britain's economy is also wrestling with inflation at a 41-year high of 11.1%, fuelled largely by a surge in gas prices after Russia's invasion of Ukraine. 

That threatens to cause the biggest fall in living standards since records began in the 1950s.

"The truth is we just got a lot poorer. We are in for a long, hard, unpleasant journey — a journey that has been made more arduous than it might have been by a series of economic own-goals," Mr Johnson said.

The IFS criticised Mr Hunt's decision to delay by two years reforms to social care, which it feared would be a "death knell" for the proposals, and also highlighted a surge in spending on disability benefits.

• Reuters