Despite expected economic woes the UK is on course to have the largest budget surplus 'in a generation' as the amount of tax coming in will be greater than state outgoings, the IFS's green budget said.
A recession is on the horizon and the chancellor 'is in a terrible bind' as low growth and high-interest payments on debt mean little room for manoeuvre, according to a respected think tank. The UK economy is stuck between the possibility of low growth and persistently high inflation, the Institute for Fiscal Studies said in its green budget report. As a result, there is no capacity to cut taxes or increase spending, it said.
Echoing statements made by Jeremy Hunt to Sky News last week, the report said £30bn more in interest payments could be paid this year than expected. Pressure will mount on the government to increase public spending more than current plans but from March 2025 there are likely to be effective cuts in the budgets of government departments and falling spending on public services, the report added. The publication comes ahead of the chancellor's autumn statement on 22 November.
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