The Budget was “reminiscent of fiscal fiction” that will not improve economic growth and does little to put money in people’s pockets, a leading economist has said.
Tax increases set out by Chancellor Rachel Reeves – largely due to thresholds being frozen – would “never” be “good for growth,” the head of the Institute for Fiscal Studies (IFS) said.
Despite Reeves repeatedly insisting that growth is her priority, the Budget did nothing to tackle the “lacklustre” economy and “stagnating living standards”.
Forecasts that average disposable incomes will grow by just half a percent per year this parliament are “truly dismal” especially when contrasted with the more than 2 per cent per year seen from the mid-1980s to mid-2000s,” she said.
In a post-Budget briefing, IFS Director Helen Miller said Reeves had also “pared back” public spending later in this parliament – paving the way for austerity in future years.
But she suggested a heavy degree of skepticism as to whether these spending cuts would actually go ahead.
“The fiscal forecasts are predicated on spending plans that would involve near-heroic restraint in an election year, and a back-loaded set of tax rises that almost entirely delay the pain,” Miller said. “It’s reminiscent of the fiscal fictions of recent years.”
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