Budget a Work of Fiction Without a Plan for £35bn
The Institute for Fiscal Studies says honouring the government’s spending pledges in real terms — defence at 3% of national income by 2030 and a health uplift without squeezing other departments — would cost about £35bn. Its director Helen Miller says a “steady-as-she-goes” Budget “is not an option available to the chancellor”.
Four different figures are circulating and only one of them is £35bn. That sum is the cost of delivering stated pledges in real terms once this year’s inflation shock is absorbed. It is not a hole in the public finances: the institute still expects the fiscal rules to be met, with headroom of roughly £20bn against the £24bn forecast in the spring, a reduction of about £4bn. Separately it puts £10bn on the 2029-30 borrowing-cost forecast. Other economists think market moves since February could erase about half the headroom — a far larger claim than the institute’s own. Ms Miller’s warning is about honesty rather than arithmetic: “Simply pencilling in implicit cuts that he has no intention of delivering would make the Budget a work of fiction.” John Healey, before this week’s International Monetary Fund meetings, said conflict abroad was “leading to higher prices at the pumps and more expensive mortgages at home”. The institute cautions that its own forecasts are “exceptionally uncertain” and that the official watchdog “may come to a very different conclusion”. The Treasury declined to comment on “rumour and speculation”. The Budget is on 28 October.