10 Jul 2020
The Institute for Fiscal Studies (IFS) has warned that the government will need to raise taxes in order to pay for the economic support measures announced by Chancellor Rishi Sunak in the Summer Economic Update.
The cost of the Chancellor's economic support measures has risen to £190 billion, according to recent data. The Summer Economic Update included another £30 billion in measures to boost the UK economy following the coronavirus (COVID-19) lockdown.
The IFS has predicted that government borrowing will rise to £350 billion in 2020.
The business group recently published an analysis of the Summer Economic Update, in which it stated that further spending support will most likely be needed in the Autumn Budget. This could take the form of targeted tax cuts.
However, the IFS also warned of tax rises in the near future.
Commenting on the issue, Paul Johnson, Director of the IFS, said: 'Let's hold in the back of our minds that a reckoning, in the form of higher taxes, will come eventually.
'This is no normal recession. It's the deepest in history.'