Rishi Sunak. Picture: WPA/GETTY IMAGES/JOHN SIBLEYChancellor of the exchequer Rishi Sunak’s pledge to repair the UK’s public finances means he will need to raise billions of pounds through taxes or spending cuts that economists are warning could damage a recovery from the worst slump in three centuries.
Sunak will need to raise another £27bn just to meet the “loosest” definition of balancing the books — matching day-to-day spending and revenue within five years — according to the government’s fiscal watchdog, the Office for Budget Responsibility. While finding the savings could prove tricky, economists say even his baby steps towards paying for the pandemic in this week’s announcement could hurt an already dim outlook for growth, according to Bloomberg Economics and Bank of America Merrill Lynch.
“While the priority now is to support the economy, the permanent damage to the public finances means taxes will rise in future,” said Torsten Bell, the think-tank’s CEO. “But which taxes those will be, like which Brexit we can expect, are questions the chancellor left for another day.”
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