In this Autumn Statement lower growth forecasts will push up forecast government borrowing and debt.
By 2019–20 our central estimate is that, with no policy change, lower growth could result in tax revenues being £31 billion lower than forecast in the Budget. This might be offset by £6 billion lower spending if we stop any payments to the EU budget. The net effect of borrowing £25 billion more than forecast in the Budget, would imply a deficit of £14.9 billion rather than the £10.4 billion surplus that George Osborne was aiming for.
These figures assume all the challenging spending cuts announced by Mr Osborne are delivered, including £3.5 billion of unspecified “efficiencies” pencilled in for 2019–20. They don’t take account of the income tax cuts promised in the Conservative manifesto but not yet enacted. They do assume no EU Budget contributions in 2019–20.
These are the headline findings of a new report by IFS researchers published today and funded by the Economic and Social Research Council.