Tax and Fiscal Policy

£113bn spending cuts a good start, but not enough


Press Release

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Press Release

IEA responds to job cuts forecast by Treasury

The IEA responds to the emergency budget
In response to the emergency budget Philip Booth, Editorial and Programme Director at the Institute of Economic Affairs, said:

“Osborne’s budget maintains spending at its current levels in real terms over the next five years. The headline figure of £113bn of spending cuts misrepresents the situation. This figure represents a cut in previous projected increases, not a cut in real terms.”

“The budget actually leaves real terms spending at its current level and relies on growth to bring public spending down to around 41% of GDP by 2014/2015. In light of the scale of cuts needed it is absurd that health and international aid were not affected by today’s measures. Government spending at 30% of GDP should be the government’s long-term target in order to realign the relationship between the individual, the society and the state.”

“The budget moves the direction of tax policy the right way in some respects: especially with regard to corporation tax changes. However, much work needs to be done to make the tax system more efficient, coherent and growth-promoting.”

“The budget’s freeze on public sector pay is much needed, though complete decentralisation of public sector pay must be the medium term aim. It is to be hoped that the Comprehensive Spending Review, combined with the Public Sector Pensions Commission, will provide an opportunity for Osborne to be more ambitious in his reform plans.”

To arrange an interview with Philip Booth, IEA Editorial and Programme Director, please contact Stephanie Lis, Communications Manager, 077 5171 7781, 020 7799 8900, [email protected].