The scale of the problem

Today’s IFS briefing sets out what needs to be done if the Budget is to be back balance by in 2015-16:

“For £39 billion to be raised without any further tax-raising measures, growth in total public spending over this period would need to be reduced by 1.1 percentage points a year, i.e. there would need to be a five-year real freeze in total public spending. Because of rising real spending on debt interest payments, tax credits and social security benefits, this would require real cuts in most other areas of government spending, and even favoured areas such as health and education would undoubtedly see much lower spending growth than they have received in recent years. Alternatively, were the £39 billion to be raised entirely through further tax-raising measures – thereby eliminating the need for any further spending cuts – then taxes would need to be raised by an average of £1,250 per family.”