Britain’s economic outlook is gloomy at best, according to the IFS Green Budget, launched this morning, with Brexit causing high levels of uncertainty, further public services cuts forecast and increasing pressure on consumer spending.
We’ve gathered five of the most significant graphs from the green budget. They show burgeoning funding crises in health, social care and other public services, but don’t expect much action from Philip Hammond in next month’s budget.
He will claim that low spending and high tax are justified, because the Conservatives are going to balance the books during the next parliament.
But like George Osborne, Hammond is unlikely to meet his own arbitrary target, despite the damage he’s done in its name.
1. Austerity is about to accelerate…again
We’ve become so accustomed to austerity over the years, that we almost forget it’s still going on, but over the next few years we’ll be seeing a real cut of £12.12bn to day-to-day spending. Already, real spending on public services has fallen by 10 per cent since 2009/10 — by far the longest and biggest fall in public service spending on record.
2. And tax is rising…
By the end of the decade, the tax burden will hit its highest level as a share of national income since 1986/7, with £17bn of tax rises planned over this parliament relative to 2015/16
3. When you adjust for an aging population, real health spending will fall across the decade
While the Tories like to crow about their increased investment in the NHS, they never put it in the context of a growing and ageing population. When real spending is age and population adjusted, it shows that projected health spending in 2019/20 will be lower than it was in 2009/10.
4. To maintain social care spending, local government will have to find cuts elsewhere
Given the increasing need for social care for ageing people, and the government’s continued insistence on eliminating the deficit, it’s likely that increased funding for social care will be drawn from other areas of local spending. Eventually, however, the pressures may force further borrowing. The IFS warns that to keep pension promises and keep pace with rising demands for health and social care, annual spending will need to increase by about £20 billion over the next parliament.
5. It’s not all about Brexit, but the Tories are making Brexit worse
While the economy has been more resilient than many projections suggested in the immediate effects of Brexit, Andrew Goodwin of Oxford Economics projects that the worst impacts are going to be felt in the long-term. Moreover, the government’s current approach is considered to be ‘at the more economically damaging end of the spectrum’, and populist policies like drastic immigration correlate with negative economic outcomes.
Niamh Ní Mhaoileoin is editor of Left Foot Forward. Follow her on Twitter
