LESS than half of the state’s cuts have happened so far if the government is intending to meet the goals set out in Wednesday’s Autumn Statement, the Institute for Fiscal Studies (IFS) has said.
However, the IFS yesterday warned of a great deal of uncertainty over fiscal forecasts.
To achieve a budget surplus the UK needs “cuts on a colossal scale… taking total government spending to its lowest level as a proportion of national income since before the last war,” said IFS director Paul Johnson.
Forecasts in 2010 foresaw a deficit of £40bn this year but the government has missed that. Not due to a lack of cuts, the IFS say, but due to lower-than-expected tax revenues. The proposed cuts should lead to a balance budget by 2020, official forecasts say.
But the IFS warns official predictions depend on income tax receipts being revised down – they have been difficult to predict in the past. The interest paid on government debt has also been revised down by £16bn due to lower borrowing costs.
“If nothing else the scale of these changes should remind us just how uncertain fiscal forecasts really are,” Johnson said.