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Warning from think tank

Chancellor may be forced to raise taxes to end austerity

Philip Hammond

Philip Hammond: does not believe austerity is over

Taxes will have to rise to their highest since the 1940s if Theresa May is to meet her goal of ending austerity according to a think tank.

The Institute of Fiscal Studies will have to find an extra £19bn a year  in order to endi the austerity squeeze on public services.

Without raising taxes it would mean higher borrowing, said the IFS which has set Mrs May on a potential collision course with Chancellor Philip Hammond.

Mrs May told the Conservative Party conference that austerity was over, but the Chancellor does not think so and is determined to continue tackling the deficit in public finances. He has already warned of tax rises, potentially to help pay for the NHS.

Paul Johnson, director of the IFS, said: “The position the Chancellor is in, is a very difficult one, because he’s got a Prime Minister telling the world austerity is over. He doesn’t think austerity is over. He thinks he still needs to get borrowing down and that’s going to require more cuts in public spending.

“Is he going to do essentially what his prime minister has told him to do, end austerity and increase spending by a good £20bn a year or is he going to keep to the Conservative manifesto pledge to get rid of the deficit in the next few years? He can’t do both.”

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