Kwasi Kwarteng Must Find £60 Billion Of Spending Cuts After Mini-Budget Fiasco, Says IFS

Respected economics think-tank warns chancellor he risks "stretching credulity to breaking point".
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Kwasi Kwarteng must impose “big and painful” spending cuts on the public sector to pay for his tax giveaways, according to leading economists.

The highly-respected Institute for Fiscal Studies said the chancellor will need to find £60bn in savings to balance the books.

The grim warning came after Kwarteng was forced to bring forward his plan to bring down the national debt from November 23 to Halloween in an attempt to calm the international money markets.

“Cuts on this scale would require some big choices,” the respected think-tank said.

The IFS said Kwarteng could have to axe 15% from non-NHS and non-defence day-to-day public service spending.

“With a weaker economy, getting government finances on a sustainable path without cancelling tax cuts could force chancellor into big and painful spending cuts,” the IFS said.

And it warned promising tightening on that scale through spending cuts alone, without actually specifying which budgets would be cut, “risks stretching credulity to breaking point”.

Kwarteng’s mini-budget contained £45 billion-worth of unfunded tax cuts, sparking economic chaos which saw the pound plunge and mortgage rates soar.

The chancellor was eventually forced to U-turn on plans to scrap the 45p income tax rate paid by the highest earners.

Labour has demanded Kwarteng and Truss abandon their “fantasy” mini-budget.

“This is a Tory crisis that has been made in Downing Street, and that is being paid for by working people,” shadow chancellor Rachel Reeves said.

Sarah Olney, the Lib Dem Treasury spokesperson, said the government was “on the verge of having to commit to nation-destroying spending cuts.”

“If the Conservatives think they can cut taxes for the richest companies and risk cutting our vital services like the NHS they will go down as the most out of touch Government on record,” she said.

Kwarteng had initially planned to announce his plans for cuts on November 23.

But on Monday - in another U-turn - he said the statement to the Commons would happen on Halloween.

The independent Office for Budget Responsibility’s (ORB) long-awaited assessment of his plans will also be published on the same day.


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