The Institute for Fiscal Studies (IFS) has said that austerity could be lengthened for two years if the UK chooses to leave the EU. The independent think tank report was co-authored by Carl Emmerson , Paul Johnson , Ian Mitchell and David Phillips.
The report concluded:
“It is possible – though in our judgement unlikely – that a further£20–40 billion of spending cuts or tax rises would be implemented in years up to 2019–20 in an effort to keep the public finances on track for the currently predicted £10 billion surplus. This would be both difficult to achieve and unlikely to be appropriate in a period of weak economic performance. Even restoring just a budget surplus would, under the most optimistic scenario, be far from easy – for example, this would require an additional fiscal tightening equivalent to increasing the cuts to day-to-day spending by central government on public services planned for this parliament by 40%, and increasing the planned cuts to social security by 40%, alongside a £5 billion net tax rise. Perhaps more likely would be to extend the period of ‘austerity’ into the next parliament and identify tax rises or public spending cuts then. In the more optimistic scenario, roughly an additional year of cuts at the same rate as we have experienced over this decade would get us back to budget balance. In the more pessimistic scenario, an additional two years would be required. Another alternative would be simply to live with higher borrowing and higher debt for a longer period”.
Vote Leave didn’t comment on the content of the report but said:
“The IFS is a paid-up propaganda arm of the European Commission”.