Chancellor John Healey has been warned by the Institute for Fiscal Studies (IFS) that his budget risks being a "work of fiction" if he does not set out plans to cover £35bn in spending pressures. The IFS, a leading tax and spending expert body, published its "green budget" report ahead of Healey's 28 October budget.
The IFS stated that higher inflation, exacerbated by the war in the Middle East, means the Chancellor will need to either increase funds for current government spending plans or implement deep real-terms cuts by the end of the decade. Helen Miller, the director of the IFS, commented that "Simply pencilling in implicit cuts that he has no intention of delivering would make the budget a work of fiction."
The thinktank cautioned that not addressing this issue in the budget could give the impression that Labour's spending plans are unrealistic. The IFS also noted that compensating for the inflation shock and funding Healey's pledge to raise defence spending to 3% of GDP by 2030 would necessitate tax rises or benefit cuts totalling approximately £35bn.
A Treasury spokesperson stated that the Chancellor is focused on boosting business, helping with the cost of living, and supporting people, underpinned by fiscal discipline. They added that the Office for Budget Responsibility will publish its updated forecast alongside the budget in October.