Taxes could take decades to reach their pre-Covid levels. IFS economists issue a warning after the Autumn Statement

Taxes could take decades to reach their pre-Covid levels. IFS economists issue a warning after the Autumn Statement

UK taxes may not return to pre-Covid levels for decades as the UK faces a “long, hard journey” to recover, economists have said.

Responding to the Chancellor’s Autumn Statement, the Institute for Fiscal Studies (IFS) said the UK “just got a lot poorer” and described the current economic state as “grim”.

Paul Johnson, Director of the IFS, said high taxes and a bigger state were “here to stay, unless something radical happens” alongside high borrowing, high debt and strained public services.

He gave examples of Brexit, reduced investment spending and education funding and the recent mini-budget as examples of the “economic own goals” that have led to the current economic situation.”

“The truth is we just got a lot poorer.

“I would be most surprised if the tax burden gets back down to its long term pre Covid average at any time in the coming decades,” Mr Johnson said.

“He said that Chancellor Jeremy Hunt had delayed a “painful package of spending cuts” in the hope that economic growth may eventually render them unnecessary.

But, he warned, the “uncertainty runs in both directions” and said eventual cuts may have to be deeper than anticipated.

He said “middle England” faced a “shock” due to the squeeze in incomes, with those on medium incomes facing the biggest hit to their living standards.

And Mr Johnson warned that public sector workers could not expect a real terms pay increase without it being accompanied with sweeping job losses in public services.

The above summary was derived from the story linked below

Source: Taxes may not return to pre-Covid levels for decades IFS economists warn after Autumn Statement

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