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UK public finances to be £25bn worse off by 2020

by November 10, 2016

written by 10^th Nov 16 9:49 am

More Brexit trouble?

A new think tank has warned that since the March Budget public finances have deteriorated by £25bn.

Weak growth could lead to lower-than-expected tax receipts, an increase on borrowing by £25bn from 2019 to 2020.

Forecasts come ahead of this year’s Autumn Statement on 23 November, this will be Philip Hammond’s first significant test since he became chancellor after the Brexit vote.

Thomas Pope, IFS research economist told the BBC: “The new chancellor’s first fiscal event will not be easy,”

“Growth forecasts are almost sure to be cut, leading to a significant increase in the deficit even if all the very challenging spending cuts currently planned are in fact delivered.”

Hammond has already spoken about how he will focus spending on building new homes and transport rather than follow the footsteps of his predecessor George Osborne who had the aim of balancing the books by 2020.

Several economists and think tanks have had to reduce their UK growth forecasts and raise their inflation forecasts since the EU Referendum.