IFS: Chancellor must raise taxes in new Budget
The Institute for Fiscal Studies has said that the new chancellor must raise taxes or risk breaking governmental borrowing rules in his first Budget.
Abandoning the rules which were set out in the Conservative election manifesto of last year will undermine any credibility the government seeks to have with regards to their fiscal targets.
Rishi Sunak, who replaced Sajid Javid earlier this month, is expected to invest more money in social care, schools and the NHS.
He has been left with a target to balance governmental spending by 2022, as set by his predecessor.
Sunak will deliver the statement on 11 March, following his appointment to the position after Javid resigned in the reshuffle.
However, the IFS have said that the current spending plans will not be feasible without raising taxes.
It is currently believed that Sunak is under pressure from both the prime minister and his chief advisor to loosen current spending constraints.
The think tank have said that with current policy, borrowing in the coming year could be up to £63 billion, a total of £23 billion more than the current official forecast.
Considering the current plan to increase spending, balancing the budget would not be enough to bring down overall debt.
The IFS have suggested ways in which the government might raise sufficient revenue, including ending the freeze on fuel duty, which is expected to provide the government with an additional £4 billion in revenue.
Paul Johnson, director of the IFS said that "We have already had 16 fiscal targets in a decade, and fiscal targets should not just be for Christmas.
"Mr Sunak should resist the temptation to announce another and instead recognise that more spending must require more tax.”
John McDonnell, the shadow chancellor, said that the report highlighted the "damage done by a decade of decline".