George Osborne's austerity drive 'may have to last for eight years'

The IFS said the Treasury may have to identify a further £11bn in cuts and tax rises

George Osborne's squeeze on public spending could last three years longer than originally planned with tax rises or additional cuts required to reach his "fiscal mandate", a respected economic think-tank warns.

Monday's "relatively pessimistic" projection from the Institute of Fiscal Studies (IFS) ahead of the Chancellor's Autumn Statement on the economy next week, reveals that Mr Osborne could be forced to extend his public spending reductions into 2018.

The IFS says that the Treasury could need to identify a further £11bn from cuts or tax rises on top of the further £8bn reduction in welfare spending already planned.

Mr Osborne has already had to signal further real-terms cuts of 2.3 per cent in Whitehall spending up to 2016/17 and the slashing of the benefits bill by another £8bn.

The IFS scenario is based on a prediction that the recent deterioration in UK growth prospects and tax receipts continues. Then, the Chancellor would be forced to announce significant further cuts to reach his "fiscal mandate", the IFS said.

Labour seized upon the IFS report as proof that Mr Osborne was "choking-off" the economic recovery.

"The Chancellor should use the Autumn Statement to finally set out a plan to create the jobs and growth which are vital to get the deficit down," said shadow Treasury Minister, Chris Leslie.

Mr Leslie added: "People on low and middle incomes should not be paying the price for this government's economic failure."

The IFS also predicted that Mr Osborne was on course to miss his other fiscal target to reduce the national debt by 2015/16.

It said that, with borrowing set to reach £133bn for the current financial year – £13bn higher than forecast – Mr Osborne may be forced to abandon the 2015/16 debt target.

"Since the Budget, the outlook for the UK economy has deteriorated and Government receipts have disappointed by even more than this year's weak growth would normally suggest," said Carl Emmerson, deputy director of the IFS.

Mr Emmerson added: "As a result, the Chancellor might find himself having to abandon one of his fiscal targets. If much of the additional weakness this year feeds into a permanently higher outlook for borrowing, then in order to comply with his other fiscal target Mr Osborne would need to announce yet more tax rises or spending cuts for the next parliament in next week's Autumn Statement.

"In that case the planned era of austerity could run for eight years – from 2010/11 to 2017/18."

Alison Garnham, chief executive of the Child Poverty Action Group, today said a "perfect storm" was brewing for low-income households with more benefit cuts, service reductions and Whitehall welfare reform planned by the Treasury.

But a Treasury spokesman said last night: "Action taken by the Government has cut the deficit by a quarter whilst over a million new jobs have been created in the private sector, inflation is down, and the economy is healing.

"Britain still faces economic challenges at home and abroad but the Government is taking the tough decisions needed to deal with our debts and equip our economy for the global race."

Start your day with The Independent, sign up for daily news emails
Have you tried new the Independent Digital Edition apps?
News
ebooksAn unforgettable anthology of contemporary reportage
Latest stories from i100
Have you tried new the Independent Digital Edition apps?
Independent Dating
and  

By clicking 'Search' you
are agreeing to our
Terms of Use.

iJobs Job Widget
iJobs General

Recruitment Genius: Sales Executive - OTE £45,000

£18000 - £45000 per annum: Recruitment Genius: A Sales Executive is required t...

Recruitment Genius: Test Development Engineer

£35000 - £40000 per annum: Recruitment Genius: Are you inspired to bring new a...

Recruitment Genius: Trainee Motor Engineer

£14000 - £18000 per annum: Recruitment Genius: This is an exciting opportunity...

Recruitment Genius: Technical Administrator

£15000 - £18000 per annum: Recruitment Genius: This company are a world leadin...

Day In a Page

On your feet! Spending at least two hours a day standing reduces the risk of heart attacks, cancer and diabetes, according to new research

On your feet!

Spending half the day standing 'reduces risk of heart attacks and cancer'
Liverpool close in on Milner signing

Liverpool close in on Milner signing

Reds baulk at Christian Benteke £32.5m release clause
With scores of surgeries closing, what hope is there for the David Cameron's promise of 5,000 more GPs and a 24/7 NHS?

The big NHS question

Why are there so few new GPs when so many want to study medicine?
Big knickers are back: Thongs ain't what they used to be

Thongs ain't what they used to be

Big knickers are back
Thurston Moore interview

Thurston Moore interview

On living in London, Sonic Youth and musical memoirs
In full bloom

In full bloom

Floral print womenswear
From leading man to Elephant Man, Bradley Cooper is terrific

From leading man to Elephant Man

Bradley Cooper is terrific
In this the person to restore our trust in the banks?

In this the person to restore our trust in the banks?

Dame Colette Bowe - interview
When do the creative juices dry up?

When do the creative juices dry up?

David Lodge thinks he knows
The 'Cher moment' happening across fashion just now

Fashion's Cher moment

Ageing beauty will always be more classy than all that booty
Thousands of teenage girls enduring debilitating illnesses after routine school cancer vaccination

Health fears over school cancer jab

Shock new Freedom of Information figures show how thousands of girls have suffered serious symptoms after routine HPV injection
Fifa President Sepp Blatter warns his opponents: 'I forgive everyone, but I don't forget'

'I forgive everyone, but I don't forget'

Fifa president Sepp Blatter issues defiant warning to opponents
Extreme summer temperatures will soon cause deaths of up to 1,700 more Britons a year, says government report

Weather warning

Extreme summer temperatures will soon cause deaths of up to 1,700 more Britons a year, says government report
LSD: Speaking to volunteer users of the drug as trials get underway to see if it cures depression and addiction

High hopes for LSD

Meet the volunteer users helping to see if it cures depression and addiction
German soldier who died fighting for UK in Battle of Waterloo should be removed from museum display and given dignified funeral, say historians

Saving Private Brandt

A Belgian museum's display of the skeleton of a soldier killed at Waterloo prompts calls for him to be given a dignified funeral