‘Black hole’ in public finances

The Institute for Fiscal Studies (IFS) warned that Britain faced ‘two parliaments of pain’ as it calculated a £45 billion ‘black hole’ in the government finances following the Budget, requiring either a tax rise of £1,430 per family or massive spending cuts. When the effect of the 8 per cent annual growth in debt interest payments and rising spending on unemployment benefit are taken out, spending across government departments will have to fall by an average of 2.3 per cent a year in real terms – the largest spending cuts since the 1970s. The IFS has calculated that by 2017/18 the losses will be the equivalent to £2,840 a year for every family, of which only half has been accounted for by the government.