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Britain faces "eight years of pain" as the Government seeks to cut the nation's overdraft, experts warned today.
The Institute for Fiscal Studies forecast cuts in many areas of more than 16 per cent from 2011 to 2014 if expenditure on the NHS, schools, defence and overseas aid is to keep rising. But cuts or tax rises will have to last longer if Labour, or the Tories, are to meet a target of reducing the deficit from 11.9 per cent of GDP next year to 1.3 per cent by 2018.
"It could be eight years of pain," said IFS deputy director Carl Emmerson. "Under Labour spending plans at the moment, it is the tightest three years since 1977 when the IMF were involved in setting spending plans in the UK."
Chancellor Alistair Darling has moved to tackle the debt mountain, including a new 50p tax rate on the rich, but the IFS says there is still a £45billion black hole in his plans to balance the books.
Former Tory Chancellor Lord Lawson, who is advising David Cameron, said if the Conservatives win the election they should hold an emergency budget, as Lady Thatcher did in 1979.
"To wait until the following March or April would be disastrous," he said. With public finances in a "terrible mess", he said, the markets would need to see the Tories were serious about balancing the books, which would help the Government avoid paying high interest rates on its borrowing.
Lord Healey, Labour Chancellor from 1974 to 1979, praised Gordon Brown's handling of the crisis but warned of deep cuts in public spending. He said: "It is always painful to many people depending on what area you cut."
Reader views (5)
Surely, considering the financial state of the UK., we will soon be asking Third world countries for aid, rather than sending it to them if we have to borrow it? Exactly what school of economics did our present government ministers go to?
- Jonathan Montmorency, cooden, uk, 27/07/2009 10:38
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Gormless Brown has put the UK in debt for the grand total of GBP1,400,000,000,000.00.
Any idiot can borrow and spend money they do not have.
IT WILL TAKE AT LEAST 30 YEARS TO CLEAR THE UK's DEBT.
ALL MP's LIVE IN CLOUD CUCKOO LAND.
- Reuben Camara, Republic of Morecambe, UK, 27/07/2009 04:35
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Looney Healey can praise Brown, because it makes him look good compared to Brown, whose policies have been even more disastrous than that of Healey.
Healey took 4 years and Brown 10 years, but Brown's will go down in history as the worst because he he ignored the clear warning signs to keep raking in the cash and still remains in denial in respect of his part in this.
Bring on the election.
- Hugh, Middx, 24/07/2009 17:48
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Simple solution,tax bonuses at 90%,as 90% of the UK population never gets them.Reduce the number of MPs by 90%,as 90% of the population hate them and we all know they achieve nothing in any case,as well as the fact if they can afford to have an 14 week summer brake it is pretty clear they have nothing to do most of the time.
- Dave, london, 24/07/2009 15:01
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All this, thanks to the useless corrupt politicians and bankers. Well done for screwing this nation into a third world debt ridden dump.
- Stephend, London, England, 24/07/2009 11:08
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