Additionally, taxes are expected to take a bigger portion of the country’s income, rising from 36.5% in the current tax year to 37.1% in 2028–2029. This is especially true given that the income thresholds at which various tax rates apply are fixed rather than rising in line with inflation as they have historically done.
Consequently, the IFS states that the future administration may have three main options, unless growth picks up a lot: continue cutting back on spending on services, hike taxes even more, or take on more annual borrowing, which might stop the nation’s debt from decreasing altogether.
“Hard decisions ahead”
The IFS’s director, Paul Johnson, stated: “Money is tight.” We might experience amazing luck as we progress and avoid having to make these difficult decisions. However, we might not.
“Just because thousands of English and Scottish football fans are crossing their fingers and hoping for the best this summer doesn’t mean that the next cabinet should do the same.”
“Open the books,” he said, should not wait till the next government takes office because they are already published and open for public inspection.
“We should use them as the basis for an open and robust discussion during the election campaign,” he stated.
The IFS’s warning is similar to one it issued in the wake of the Budget in March, when it mentioned a “conspiracy of silence” involving major parties neglecting to identify possible obstacles or specify how they intended to address them.
