By Jason Theodorou

Chancellor George Osborne cannot meet his targets for deficit reduction without tax increases or spending cuts of up to £34 billion a year, according to the Institute For Fiscal Studies (IFS) - ahead of the emergency Budget on 22 June.

Osborne has already directed blame at the previous Labour government by saying that the forecasts made by the Office for Budget Responsibility (OBR) were 'damning evidence that the mess the previous government left behind is even bigger than we thought'. The OBR cut forecasts of growth from 3.25% to 2.6%.

The new report indicates that the coalition government will need to go further than their initial proposals in order to bring down borrowing as fast as Osborne believes necessary.

If the government were to find these savings by making further spending cuts to the public sector, some government departments would see their final budgets slashed by a third. With £6 billion of spending cuts already announced, the IFS said further cuts could be 'prohibitively large'.

The IFS also said that the decision to transfer responsibility for economic and public finance forecasts from ministers to independent experts had been a 'very welcome one', which would 'reassure people that they reflect professional judgement rather than politically motivated wishful thinking'.

The IFS suggested that the interim OFS had done a good job and could be instrumental in restoring the credibility of the government's fiscal management.

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