Kwasi Kwarteng will need to find £60bn of savings by 2026 to fill the gap left by unfunded tax cuts and the costs of extra borrowing triggered by a panicked reaction on international money markets to the chancellor’s “mini-budget”, according to the Institute for Fiscal Studies.
The UK will also struggle to hit the chancellor’s 2.5% growth target, with economic forecasts by the investment bank Citigroup that the IFS uses to underpin its analysis showing the UK will struggle to grow at more than 0.8% on average over the next five years.
That sluggish growth rate, thanks to a toxic cocktail of a slowing global economy, the UK’s weakened trade balance after Brexit and the fallout from the mini-budget, would be slightly less than half the growth rate forecast by the Office for Budget Responsibility in March.
The £45bn cost of the mini-budget will wipe out any financial space left to the chancellor by his predecessor, swelling Britain’s debt as as share of national income for at least the next five years.
The IFS director, Paul Johnson, said that while it was…
