The chancellor has no room for pre-election tax cuts despite a £52bn stealth tax raid, the Institute for Fiscal Studies has said.
Jeremy Hunt warned last week of “difficult decisions” for the public finances in his Autumn Statement on 22 November.
The IFS said public borrowing is forecast to reach £112bn this year, or 4.2% of gross domestic product. While the figure is below March predictions, it is still well above its long-run average – and £60bn more than forecast in the 2022 spring Budget.
As a result, national debt will remain stuck at close to 100% of national income.
However, tax revenue as a share of the British economy is on track to climb to the highest sustained level since the Second World War, thanks to the application of “fiscal drag”.
“We are in a horrible fiscal bind,” said Paul Johnson, director of the IFS. “The price of our high levels of indebtedness, failure to stimulate growth, and high borrowing costs is likely to be a protracted period of high taxes and tight spending.”
