The Chancellor Jeremy Hunt has been warned by the not to announce tax cuts if he cannot “spell out” where spending cuts will fall.
Economists at the Institute for Fiscal Studies warn in a report that regardless of the “fiscal headroom” presented, the case for tax cuts is “weak.”
Their report sets out how the fiscal outlook has changed since November.
A key change is that the outlook for spending on debt interest has improved slightly.
Despite this, they say, the fact remains that public sector net debt will barely be on course to fall in five years’ time, and only on the basis of plans for fuel duties, business rates and, in particular, day-to-day spending on public services that are unlikely to be realised.
There is therefore they conclude only a weak economic case for another sizeable net tax cut in the forthcoming Budget.
