Next five years will be ‘most difficult period’ for a parliament 'since Second World War', IFS warns

7 March 2024, 13:15 | Updated: 7 March 2024, 13:33

The director of the IFS has said that the next parliament will be the 'most difficult of any in 80 years'.
The director of the IFS has said that the next parliament will be the 'most difficult of any in 80 years'. Picture: Alamy

By Jenny Medlicott

The next five years will be the hardest period for a parliament and chancellor since the Second World War, the IFS has warned.

Listen to this article

Loading audio...

The Institute for Fiscal Studies issued the warning in its post-Budget briefing on Thursday morning.

IFS director Paul Johnson expressed doubt over whether the Government would be able to stick to its spending plans for the upcoming year due to the country’s “fiscal realities”.

He said: “Ignoring the vagaries of the current, rather bizarre, fiscal targets these underlying facts are going to constrain chancellors for the foreseeable future.

"Fiscal rules or no, fiscal realities bite,” he told a briefing.

“The combination of high debt interest payments and low forecast nominal growth means that the next parliament could well prove to be the most difficult of any in 80 years for a chancellor wanting to bring debt down.

"Even stabilising debt as a fraction of national income is likely to mean some eye-wateringly tough choices, and we are talking tens of billions of pounds worth of tough choices, on tax and spending."

Paul Johnson held his post-Budget briefing on Thursday morning.
Paul Johnson held his post-Budget briefing on Thursday morning. Picture: Alamy

Read more: Rishi Sunak and Jeremy Hunt 'aim to axe National Insurance entirely', as Labour call Budget 'damp squib'

Read more: Chancellor hails his 'BMW' Budget - but Labour warns of 'cynical gimmick' that leaves many people worse off

It comes after Mr Hunt announced a 2p cut to National Insurance contributions for employees in his Budget on Wednesday, from 10%-8%, with the change to come into effect from April 6.

But the Chancellor and Prime Minister have also indicated that they want to scrap national insurance altogether.

Mr Sunak said on Wednesday evening that abolishing national insurance was "our ambition long term", without giving a schedule. The tax cut could reduce government revenues by around £50 billion per year.

Mr Johnson hit out at the Prime Minister’s indicated goal, as he said cutting the tax altogether was not “realistic”.

Jeremy Hunt and Rishi Sunak have signalled they want to scrap national insurance altogether.
Jeremy Hunt and Rishi Sunak have signalled they want to scrap national insurance altogether. Picture: Alamy

“Tax has risen to a higher fraction of national income than it has ever been in my lifetime, and I don't expect it to return to its previous level for the rest of my lifetime,” he said.

He also warned that by accepting the slashed national insurance contributions, Labour had “made life more difficult for itself”.

“That is £10 billion a year they have lost. The opposition have been just as shy as the chancellor about telling us what they actually intend to do on taxes and spending after the election.”

“If I am sceptical about Mr Hunt's ability to stick to his current spending plans, I am at least that sceptical that Rachel Reeves will preside over deep cuts in public service spending,” he added.

More Latest News

See more More Latest News

Christina Sandera and Clint Eastwood in 2018

Clint Eastwood's partner Christina Sandera dies aged 61, as 94-year-old Hollywood icon gives poignant tribute

Israeli occupation of Palestinian territories is unlawful, the International Court of Justice has ruled

Top UN court rules Israeli occupation of Palestinian territories 'unlawful', as Netanyahu slams 'false decision'

Over 4,000 flights have been delayed or cancelled today.

Has your flight been affected by the global IT outage? Can you claim compensation?

Friday was the hottest day of the year so far - but the mini heatwave will end soon

Exact date mini-heatwave to end, as Friday becomes hottest day of the year so far with temperature close to 32C

Ben Ross has been missing since July 10

Mum of missing Brit Ben Ross to fly to Majorca for desperate search as police issue statement

Shaikha Makhra announced her split on Instagram

Dubai princess announces divorce from husband via Instagram 'as he is occupied with other companions'

Thousands of flights where cancelled across the globe on Friday.

Worldwide IT outage could last 'days' as flights grounded, shops closed and operations cancelled

The Kering Foundation Hosts First-Ever Caring For Women Dinner

Emma Watson ‘stalker’ arrested after demanding to see Harry Potter star at Oxford fashion show

Passengers are facing delays across the country

Is your flight delayed? Airports and airlines issue updates after mass IT outage causes travel chaos around the world

Evan Gershkovich, a Wall Street Journal reporter, was detained last March on spying charges

American journalist jailed for 16 years in Russia after being convicted of espionage

People have been out enjoying the sunshine ahead of the weekend.

Hot hot hot! Temperatures soar to 31C today and 30C tomorrow after an uncomfortable tropical night tonight

Harehill descended into chaos yesterday evening

Starmer condemns ‘shocking and disgraceful’ disorder after riot sweeps through Leeds

Joe Biden and Barack Obama worked in office together between 2008 and 2016

Biden planning ‘major announcement’ about his future as Obama says he must ‘seriously consider stepping down’

Zara McDermott opened up about the "extremely distressing" events that occurred behind the scenes at Strictly Come Dancing.

Zara McDermott hits back after ex-Strictly pro Graziano Di Prima claims he only kicked her once

Lee Laudat-Scott is charged with touching a boy under 13.

Former Labour councillor Lee Laudat-Scott charged with sexual assault of a child

Graham Gomm

Urgent manhunt as prisoner escapes custody at HMP Wormwood Scrubs during trip to hospital