Magazine article Public Finance

Public Services Face Post-Recession Spending Squeeze

Magazine article Public Finance

Public Services Face Post-Recession Spending Squeeze

Article excerpt

Most parts of the public sector could face five years of realterms cuts to restore the public finances after the recession, if the government chooses not to push taxes up.

The grim forecast came from the Institute for Fiscal Studies. It said the government would need to raise an additional £39bn - on top of the £38bn clawback set out in the PreBudget Report - to bring the public finances back into balance by 2016.

The IFS figures - issued in an April 3 briefing note examining the consequences of rising public borrowing and debt almost doubles the think-tank's previous estimate that a£20bn additional clawback would be needed.

Some of the £39bn could be found through tax rises from April 2011. But the IFS warned that there would need to be a five-year real freeze in public spending' if the government shied away from this option.

It added: '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. …

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