No-deal Brexit would push UK debt to 50-yr high, says think tank

No-deal Brexit would push UK debt to 50-yr high, says think tank

Agency News

London, Oct 8 : Even a "relatively benign" no-deal Brexit would push UK debt to its highest since the 1960s, the Institute for Fiscal Studies (IFS), a think tank, has said.

According to a BBC News report, the think tank said borrowing was likely to rise to £100bn and total debt would soar to 90pc of national income. "The government is now adrift without any effective fiscal anchor," said IFS director Paul Johnson.

The Treasury said any decisions would be made "with a view to the long-term sustainability of the public finances". The IFS's Mr Johnson said: "Given the extraordinary level of uncertainty and risks facing the economy and public finances, it [the government] should not be looking to offer further permanent overall tax giveaways in any forthcoming Budget.

"In the case of a no-deal Brexit, though, it should be implementing carefully targeted and temporary tax cuts and spending increases where it can effectively support the economy." But even before the cost of a possible no-deal Brexit is factored in, the think tank said the government was set to break its own spending rules.

The IFS forecasts that annual borrowing - the difference between what the government spends and what it receives through, for example, taxation - will top £50bn next year.

That will be about 2.3pc of gross domestic product (GDP), a measure of national income. Under current spending rules the government can only borrow up to 2pc of national income.

The think tank said day-to-day spending looked set to approach levels that were expected from Labour's 2017 manifesto, which was likely to cost taxpayers more than plans laid out by the Conservative party at the time. An HM Treasury spokesperson said: "September's spending round supported the people's priorities of health, education and the police within the existing fiscal rules, as we said it would be.

"Beyond that, the chancellor has already said that we will be reviewing the fiscal framework as we turn the page on austerity. In so doing, we will retain a fiscal anchor to public spending so that decisions are taken with a view to the long-term sustainability of the public finances." (UNI)