‘Sugar Rush’ Of Tax Cuts Before Election Fuels Recession Fears

A leading think tank has warned that the Government is in a ‘terrible bind’ – whoever wins the next election.

The Institute for Fiscal Studies says weak economic growth and stubbornly high inflation leave ‘no room’ for unfunded tax cuts or spending increases any time soon.

One problem is the amount the government is shelling out on interest payments on the nation’s debt mountain, which stands at almost £2.6 trillion at the end of August.

The IFS’s sobering assessment comes as Chancellor Jeremy Hunt prepares to announce his Autumn Statement next month. It warned unfunded tax cuts ahead of the next election could create a ‘short-term economic sugar rush’.

But this risked fuelling the chances of a recession if the Bank of England has to hike interest rates further to control inflation, the IFS said. It added that the Chancellor is in a terrible bind, as will be whoever is Chancellor after the general election.

Publishing its Green Budget, the IFS said that on one hand, the amount the Treasury is collecting in taxes has reached a record high, with government borrowing below the Office for Budget Responsibility’s forecast in March. But it warned the government’s debt interest spending was on track to reach the highest level since the 1980s, and around £30 billion above levels the country is used to.

“That’s £30 billion each year that can’t be put to better use,” it said. While the nation’s debt is expected to rise, the economy is forecast to be stuck with feeble growth. That, in turn, is set to curtail government spending plans.

“With commitments on health, defence and childcare, among others, this would imply cuts to most public service spending,” the IFS said. Today’s report was produced in association with the bank Citi, which forecast the UK would experience a “moderate” recession in the first half of next year.

Paul Johnson, director of the IFS, said the country was in a ‘horrible fiscal bind’. He added that the price of our high levels of indebtedness, failure to stimulate growth, and high borrowing costs was likely to be a protracted period of high taxes and tight spending’.

It seems like the Tories are toast, but then I wouldn’t eat it as it would probably be stale. The kind you just toss in the bin.

It’s quite straightforward actually, the Tories are absolutely useless at handling our economy, and their unfettered capitalism model has no limitations and they will always fail. Labour would be no better because the Tories have been in power for far too long and have destroyed our economy to the point of no return.

The Tories have given tax cuts just before elections since the dawn of time, then they whack them back up again after they get back in.

They pledge tax cuts in our land of milk and honey just so they can get another five more years, then it’s the normal tax for the rich and additional tax for the poor.

‘The country is in a terrible fiscal bind’ – yes, it is but still the rich continue to get richer.

The Tories are obsessed with tax cuts, but in fact, they only benefit the rich. What is usually 1 or 2p in the pound means hardly anything on an average wage.

Pretty little lies are what we will see from the Tories in the run-up to the next General Election, and then a whole load of people will ignore the last 13 years plus of Tory economic mismanagement, greed, nepotism, and corruption and vote Tory because they like the sound of the pretty lies.