IFS: UK needs £15bn in tax rises or spending cuts by 2022

Austerity is not going anywhere soon, predicts the Institute for Fiscal Studies, which warns the next government must either increase taxes or make spending cuts to eliminate the deficit.

The think-tank, often a scourge of chancellors with its headline-grabbing analysis of official Budget figures, says £15bn needs to be raised by 2022 – the date of the next parliament after the snap general election on 8 June, if the Fixed Term Parliament Act is honoured.

It came to this conclusion after summarising the UK finances under the two Conservative-led governments since 2010, a period marked by sluggish recovery from the global financial crisis.

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The financial crisis was so severe and recovery so weak that national income per adult only returned to its pre-crisis level around the end of 2015.

"National income per adult, if forecasts are correct, is set to be 18 per cent lower by 2022 than it would have been if it had grown by two per cent a year," says the London Evening Standard.

After seven years of austerity, public spending is only "broadly" back at pre-crisis levels as a fraction of national income and is still above its long-run average, says The Guardian.

The UK still has the fifth largest annual budget shortfall out of 35 advanced economies and the sixth largest debt out of 26 nations with comparable data.

However, not all the parties vying for government agree with the need for austerity. Labour has said it would borrow as much as £500bn more to fund an economic stimulus programme it believes would boost growth.

Higher growth could lead to higher tax receipts, but the implication is a longer period is needed to close the deficit and there is dispute whether the growth is achievable.

Simon Wren-Lewis, economics professor at Oxford University, told the Guardian: "There is nothing special in eradicating the deficit. It is a completely arbitrary goal."