George Osborne’s Budget came under attack from financial experts last night, with one saying that if he were the Chancellor he would not be able to sleep at night.
Paul Johnson, head of the Institute for Fiscal Studies, gave him only a 50/50 chance of fulfilling his pledge to get Britain back in the black by the end of this Parliament in 2020.
Mr Johnson added that Britain should be ready for ‘genuinely big’ tax rises. In an unremittingly bleak assessment he also said that, based on forecasts in the Budget, wage growth was too slow and living standards would fall.
Paul Johnson (pictured), head of the Institute for Fiscal Studies, gave Chancellor George Osborne only a 50/50 chance of fulfilling his pledge to get Britain back in the black by the end of this Parliament in 2020
The attack came a day after Mr Osborne had admitted a £56billion deterioration in the nation’s finances.
At the same time, the Chancellor was facing a growing revolt on disability benefit cuts.
At least 20 Tory MPs are threatening to oppose reductions in the Personal Independence Payment made to the disabled.
The cuts to PIP are due to save the Chancellor £4.4billion by 2020 – but will lead to 640,000 people losing an average of £3,500 each.
Tory MPs said the plan was toxic and they would oppose it. Ministers were last night sent out to defend the cuts, which they insist are fair, and Work and Pensions Secretary Iain Duncan Smith wrote to all Conservative MPs to urge them to back the changes.
The attack came a day after Mr Osborne had admitted a £56billion deterioration in the nation’s finances
But Mr Osborne was already signalling he may have to rethink the plan – which would leave him with another huge hole in his finances. Also yesterday:
- Eurosceptic MPs threatened a damaging rebellion over EU rules which forces the UK to impose VAT on tampons and solar panels.
- It was estimated dozens of Tory MPs could oppose Mr Osborne’s plan for a tax on sugary drinks.
- Experts said the tax would not work anyway and would drive people to eat other sugary foods – or illicitly smuggle in drinks from overseas.
Following Wednesday’s Budget the IFS said ‘we should all be worried’ about the future as storm clouds gather over the economy.
The think-tank warned that the Chancellor is ‘running out of wriggle room’ and gave him just a 50 per cent chance of balancing the books by 2020 as planned.
Mr Johnson said: ‘It must be something that if I were the Chancellor would be keeping me awake at night now.’
He said Mr Osborne could be forced to implement ‘genuinely big’ tax rises and spending cuts to get Britain back into the black.
The Institute also shed light on another £9.9billion of cuts for 2020-21 hidden in the Budget documents – extending austerity into the next decade.
‘We are going to be worse off in the future than we thought we were going to be,’ said Mr Johnson.
The gloomy outlook means there will be little or no money for sweeteners for voters in the build-up to the next General Election in 2020, he added.
The warnings came a day after the independent Treasury watchdog the Office for Budget Responsibility slashed its forecasts for economic growth over the next five years.
It now expects expansion of just 2 per cent this year and 2.2 per cent in 2017, having previously predicted 2.4 per cent and 2.5 per cent.
The OBR said the weaker outlook had blown a £56billion black hole in the Chancellor’s plans.
Mr Osborne insisted he could meet his target of balancing the books – as long as the economy was growing and was not in recession.