No room for tax cuts or spending increases with recession forecast, according to the IFS

Published

2 years ago

October 17, 2023

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A recession is on the horizon and the chancellor “is in a terrible bind” as low growth and high-interest payments on debt mean little room for manoeuvre, according to a respected think tank.

The UK economy is stuck between the possibility of low growth and persistently high inflation, the Institute for Fiscal Studies (IFS) said in its green budget report.

As a result, there is no capacity to cut taxes or increase spending, it said.

Policy makers risk recession if unfunded tax cuts are introduced, as they could cause more inflation and lead the Bank of England to bring borrowing costs up by hiking interest rates or keeping them higher for longer.

Interest rates were brought to 5.25% after 14 consecutive rises in an effort to tame the rate of price rises.

Heightened borrowing costs and lower company profits have led bank Citi (who produced economic forecasting for the report) to expect a “moderate recession” through the first half of next year.

A recession is two back-to-back three-month periods where there is a negative amount of economic growth.

At the same time the government is set to have the largest budget surplus “in a generation” as the amount of tax coming into state coffers will be greater than government outgoings.

State borrowing will be £20bn less than predicted by the independent official forecasters, the Office of Budget Responsibility (OBR).

Rising wages mean more tax is being taken in. Previous analysis from the IFS said the UK’s tax burden is the largest since the Second World War.

Despite overall borrowing estimated to be lower than first thought, the amount of money in interest payments on public debt will grow, the report said.

Echoing statements made by Jeremy Hunt to Sky News last week, the report said £30bn more in interest payments could be paid this year than expected.

Pressure will mount on the government to increase public spending more than current plans but from March 2025 there are likely to be effective cuts in the budgets of government departments and falling spending on public services, the report added.

The publication comes ahead of the chancellor’s autumn statement on 22 November.

The rate of price rises in the UK has remained high with the consumer price index (CPI) measure of inflation at 6.7% in August, more than triple the goal of the UK central bank, the Bank of England.

It’s not just the chancellor who faces pressure. Prime Minister Rishi Sunak has staked some of his political success on a growing economy by making it one of his five priorities.

Latest figures show the rate of economic growth – gross domestic product (GDP) – was 0.2% in August this year after a contraction of 0.5% in July.

“Contrary to previous reporting, the UK’s growth projections have recently been dramatically upgraded with the IMF confirming that the UK will grow faster than Germany, France and Italy in the long term, as well as being the fastest major European economy to recover from the pandemic,” a spokesperson for the Treasury said.

“We must stick to our plan that we are delivering to halve inflation, which will help unlock sustainable growth, support families with the cost of living and get debt falling.”

In response, the Labour shadow chief secretary, Darren Jones said: “Successive failures by Conservatives ministers have left us with low growth, high tax and national debt at the highest level in generations. Britain cannot afford another five more years of the Conservatives.”

UK

Woman arrested on suspicion of murder after death of two children in Stafford

Published

17 hours ago

October 12, 2025

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Woman arrested on suspicion of murder after death of two children in Stafford

A 43-year-old woman has been arrested on suspicion of murder after the death of two children in Stafford.

Police were called to a home on Corporation Street at around 7.30am on Sunday by West Midlands Ambulance Service.

Two children were pronounced dead at the scene, Staffordshire Police said.

Detective Inspector Kirsty Oldfield said: “We are working hard to understand more about what happened leading up to these two children tragically losing their lives.

“We ask that people do not speculate at this stage as it is distressing for family and friends and could hinder our inquiries.

“We understand that this incident may cause concern in the local community. We don’t believe there is wider threat to the public at this time.”

The 43-year-old woman, who is from the Stafford area, remains in custody.

The force has not confirmed the ages of the two children. Their next of kin have been informed and are being supported by specially-trained officers, police said.

UK

Man charged with stalking after allegedly targeting Lib Dem leader Sir Ed Davey and his family

Published

19 hours ago

October 12, 2025

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Man charged with stalking after allegedly targeting Lib Dem leader Sir Ed Davey and his family

A man has been charged with stalking and possession of a flick knife after allegedly targeting Lib Dem leader Sir Ed Davey and his family.

Inigo Rowland, 58, of Surbiton, south London, was arrested last Monday, but it was only made public on Sunday.

He appeared at Wimbledon Magistrates’ Court on Tuesday and was remanded in custody, the Met Police said.

The offences are alleged to have taken place between June and October.

Sir Ed, the MP for Kingston and Surbiton, lives in southwest London with his wife, Emily, their 17-year-old son John, and his younger sister Ellie.

A spokesperson for the Met Police said: “Inigo Rowland, 58, of Surbiton has been charged with stalking and possession of a flick knife.

“He appeared at Wimbledon Magistrates’ Court on Tuesday, 7 October and was remanded into custody. He will next appear at the same court on Tuesday, 14 October.

“He was arrested on Monday, 6 October in relation to the offences, which are alleged to have taken place between June and October.”

A Lib Dem spokesperson said: “We cannot provide any details at this time, Ed’s number one priority is the safety of his family.”

UK

Paedophile Lostprophets singer Ian Watkins dies after attack in prison

Published

1 day ago

October 12, 2025

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Paedophile Lostprophets singer Ian Watkins dies after attack in prison

Paedophile Lostprophets singer Ian Watkins has died after being attacked in prison.

Watkins, 48, was serving a 29-year jail term for multiple sexual offences, including serious crimes against young children and babies at HMP Wakefield, in West Yorkshire.

He was attacked with a knife by another inmate on Saturday morning, sources have confirmed.

West Yorkshire Police said two men, aged 25 and 43, have been arrested on suspicion of murder.

Watkins was pronounced dead at the scene after prison staff reported the assault to police.

The prison went into lockdown in the immediate aftermath of the incident, sources added.

A Prison Service spokesperson said they could not comment while the police investigate.

Watkins was previously stabbed in an incident at the same prison in 2023, suffering non life-threatening injuries after he was reportedly taken hostage by three other inmates before being freed by prison officers six hours later.

He was sentenced in December 2013 to 29 years in prison, with a further six years on licence, after admitting 13 sex offences, including the attempted rape of a fan’s baby.

He also encouraged a second fan to abuse her child during a webcam chat and secretly stashed child sexual abuse videos, some of which he had made himself.

At the time, police described him as a “committed, organised paedophile”.

Having found fame in Welsh rock band Lostprophets, Watkins was arrested after his Pontypridd home was searched on orders of a drug warrant in September 2012.

A large number of computers, mobile phones and storage devices were seized during the search.

When sentenced at Cardiff Crown Court, the singer was told he was being given an extended sentence – and a judge said his crimes “plumbed new depths of depravity”.

After being caught with a mobile phone behind bars in 2019, he told a court that he was locked up with “murderers, mass murderers, rapists, paedophiles, serial killers – the worst of the worst”.