Austerity set to continue unless Hammond finds extra billions

Galtero Lara
Febrero 12, 2019

Figures from the IFS showing that to match his promise, Hammond needed to find more funds will come as a blow to the Treasury as it prepares the chancellor's spring statement due on 13 March.

Philip Hammond must find an extra £5bn in this year's Whitehall spending review to reverse planned cuts and meet his claim of ending austerity, a leading thinktank has revealed.

And maintaining spending on unprotected services as a share of national income would require £11bn on top of spending plans set out in the 2018 Budget.

The IFS said spending increases already promised by the Chancellor would be swallowed up by commitments to fund the NHS, defence and global aid - potentially meaning cuts to other areas.

"This would slow the pace of the cuts experienced by those areas since 2010, but would by no means represent an "end to austerity".

"This would outstrip population growth, putting per capita spending on an upward trend". And defence and foreign aid spending are protected.

"Outside the NHS, total day-to-day departmental spending is now set to grow in line with inflation, and public investment will reach levels not sustained in 40 years in this parliament".

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The IFS said a no-deal Brexit would lead to lower growth, requiring either spending cuts or higher taxes - but in the short term the Government might need to borrow more to fund a stimulus package to mitigate the impacts for the hardest-hit areas of the economy. Any boost to spending would be temporary, and further austerity would eventually be required.

Ben Zaranko, a research economist at the Institute for Fiscal Studies and an author of the report, said: "The Chancellor needs to decide what period the next spending review should cover and what funding to make available to it".

"This suggests yet more years of austerity for many public services, albeit at a much slower pace than the last nine years".

Brexit uncertainty over the coming weeks is likely to make the situation worse, while the population continues to expand at around 1m people every four years, heaping further pressure on Hammond to find extra funds to meet his promise of ending the austerity programme which began nearly a decade ago.

Last October the chancellor declared that "austerity is coming to an..."

Mr McDonnell said: "Nine years of brutal Tory austerity have wounded our public services and the whole country which relies on them".

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