Budget 2016: Institute of Fiscal Studies’ Paul Johnson says budget cuts may not materialise
Chancellor George Osborne has indicated he will announce more cuts in his Budget, but these cuts may never materialise, director of the Institute of Fiscal Studies Paul Johnson has said.
Yesterday the chancellor indicated be may have to announce cuts worth up to £4bn by the end of this parliament when he delivers his Budget on Wednesday, but Johnson said by the time the cuts would be implemented the economic situation could have changed, meaning they never become a reality.
Speaking to BBC Radio 4's Today programme, Johnson said: "[Osborne] needs to make plans all the way through to always ensure that it looks like he is in balance by the end of the parliament."
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"One of the things I am guessing he is going to do is say that these cuts will be planned to happen in 2017 or 2018 and then, frankly, hope that the numbers move back in his direction before he actually has to implement them. So what actually turns out to happen, I don’t think we will necessarily learn this week.
"I think we will learn 'this is how I will balance the books if I have to' but frankly hoping that he doesn’t have to because things don’t have to change very much at all to reverse this again," he added.
Osborne indicated yesterday that the UK must "act now to make sure we don't pay later". He said the cuts would amount to 50p in every £100 of spending by the end of the decade.
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The anticipated cuts come after the Autumn Statement in November, where Osborne was given £27bn windfall due to higher tax revenues and lower debt interest repayments.
But Johnson said that figure was always misleading, and in the last four months "things have not been going quite as well as we would have hoped. The stock market hasn't been doing very well, the international economy hasn't been doing very well, the Bank of England has downgraded its forecasts".
And he added that due to the ringfencing of certain departments, finding 50p in £100 is much harder than it actually sounds.
On a more positive note, the chancellor indicated that there could be giveaways in the Budget, including the Tory manifesto pledge to raise the personal allowance and the income level at which the 40p rate of tax is applied.