The government will be forced to increase taxes in order to pay for the huge spending tackling the health and economic implications of Covid-19, according to a leading think tank.
The Institute of Fiscal Studies (IFS) believes the UK will remain in a “support and recovery” economic state for some time, but higher taxes are inevitable to foot the bill when the time comes.
In its detailed analysis of the Summer Statement, the IFS forecast a rise in borrowing to £350bn for the year. And the think tank expects further spending in the Budget Statement in the autumn.
IFS director Paul Johnson said: “Let’s hold in the back of our minds that a reckoning, in the form of higher taxes, will come eventually.
“This is no normal recession. It’s the deepest in history.”
Mr Johnson added that borrowing as a percentage of the UK economy is on course to be its largest outside of wartime in over 300 years.
Earlier today, it was revealed that the most senior civil servant at HMRC wrote to Rishi Sunak questioning whether or not two of his key announcements were ‘good value for money’. The Job Retention Bonus and the Eat Out to Help Out were two of the biggest announcements made by the Chancellor on Wednesday.
“A lot, probably a majority, of the job retention bonus money will go in respect of jobs that would have been, indeed already have been, returned from furlough anyway,” Mr Johnson explained.