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08 October 2019

BBC: No-deal Brexit would push UK debt to 50-year high, says think tank


Even a "relatively benign" no-deal Brexit would push UK debt to its highest since the 1960s, the Institute for Fiscal Studies (IFS) has said.

The think tank said borrowing was likely to rise to £100bn and total debt would soar to 90% of national income.

"The government is now adrift without any effective fiscal anchor," said IFS director Paul Johnson.

The Treasury said any decisions would be made "with a view to the long-term sustainability of the public finances".

Spending rules

The gloomy forecasts are part of the IFS Green Budget, looking at the challenges facing Chancellor Sajid Javid as he prepares for his first Budget.

The IFS's Mr Johnson said: "Given the extraordinary level of uncertainty and risks facing the economy and public finances, it [the government] should not be looking to offer further permanent overall tax giveaways in any forthcoming Budget.

"In the case of a no-deal Brexit, though, it should be implementing carefully targeted and temporary tax cuts and spending increases where it can effectively support the economy."

But even before the cost of a possible no-deal Brexit is factored in, the think tank said the government was set to break its own spending rules.

The IFS forecasts that annual borrowing - the difference between what the government spends and what it receives through, for example, taxation - will top £50bn next year.

That will be about 2.3% of gross domestic product (GDP), a measure of national income. Under current spending rules the government can only borrow up to 2% of national income.

The think tank said the government's current plans for day-to-day spending next year are closer to the levels proposed by Labour's 2017 manifesto than plans laid out by the Conservative party at the time. [...]

Full article on BBC

UK economic outlook in four Brexit scenarios



© BBC - British Broadcasting Corporation


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