UK: Borrowing is expected to top £50bn next year
By: Newsdesk Team
City of London Newsroom
The institute of fiscal studies has said that any form of “No-deal Brexit” would result in UK borrowing rising to £100Bn [GBP] with total debt rising to the equivalent of 90% of national income.
IFS Director, Paul Johnson said “the government is now adrift without any effective fiscal anchor” he went on say “Given the extraordinary level of uncertainty and risks facing the economy and public finances, it should not be looking to offer further permanent overall tax giveaways in any forthcoming Budget.” “In the case of a no-deal Brexit, though, it should be implementing carefully targeted and temporary tax cuts and spending increases where it can effectively support the economy.”
“…The authoritative Think Tank has also warned that the Government should not even be considering any permanent tax cuts…”
But even before the cost of a possible no-deal Brexit is factored in, the IFS said the government was set to break its own spending rules with borrowing expected to top £50bn next year, or 2.3% of national income. Under current spending rules, the government can only borrow up to 2% of national income.
In the event of what now appears to be a foregone conclusion, a no-deal Brexit, the IFS concluded that a temporary government spending spree could help to smooth the path for growth. However, even with “substantial” government spending, it said it expects the UK economy to flat-line for two years following no-deal.
About the IFS
The Institute for Fiscal Studies is an economic research institute based in London, United Kingdom, which specialises in UK taxation and public policy. It produces both academic and policy-related findings.