8th February 2016
The Chancellor’s “inflexible” budget surplus goal may result in sudden tax hikes or spending cuts, the Institute for Fiscal Studies (IFS) has warned.
The IFS said that George’s Osborne’s target to manage a budget surplus “in normal times” from 2019-20 would require a “precarious balancing act”.
The independent economic think tank, which releases its annual ‘Green Budget’ ahead of the actual Budget, which happens on 16 March, said the upshot could be “big tax rises or spending cuts with very little notice”.
The IFS document, which examines the economic challenges facing the Chancellor has urged that Osborne’s target of a balancing the UK’s books by 2019-20 was inflexible, and could have major tax and spending implications if were he to receive “unfavourable” fiscal and economic forecasts.
Over the past 60 years, Britain has only run a surplus eight times.
The IFS said: “The rule has the merit of simplicity and transparency but is very inflexible and this could come at a cost.
“Even if the chancellor gets to the March 2019 Budget with his plans intact, past errors in official forecasts suggest that there would be more than a one-in-four chance that he would need to implement in-year tax rises or spending cuts to deliver a budget surplus in 2019-20.”