BOTH Labour and the Conservatives are “avoiding the reality” that their plans lock them into “sharp” spending cuts after the election, a…
and the Conservatives are “avoiding the reality” that their plans lock them into “sharp” spending cuts after the election, a leading economic think tank has warned.
But the overall, currently binding debt rule does not make a distinction between investment and day-to-day spending, meaning Labour’s plan to borrow £23.7 billion to increase investment in supporting the transition to net zero would make it more difficult to stick within the rule. Isabel Stockton, senior research economist at IFS, described the fiscal rule as having “an unfortunate combination of characteristics”.She added: “It is eminently gameable – and has already been gamed almost to irrelevance by the current Government; it is the loosest debt rule we have had in the past 30 years; and yet it is currently so constraining that it will either be breached, or will result in policies in practice quite different to those currently being peddled.
Responding to the analysis, Chancellor Jeremy Hunt said: “It is no surprise that Labour’s multibillion-pound energy promise, a huge chunk of their £38.5bn unfunded blackhole, will put Labour’s fiscal rules in jeopardy and inevitably lead to £2,094 in higher taxes.”Labour has been approached for comment.
He added: “This question is crucial, as whoever wins the election could be confronting a fiscal hole of £12 billion, if today’s uncertainties turn into bad news after the election.
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