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UK faces £28 billion black hole, warns IFS

Published 07/06/2024, 11:38
Updated 07/06/2024, 11:40
© Reuters.  UK faces £28 billion black hole, warns IFS

Proactive Investors - Britain could slip into a £28 billion black hole should it experience weak economic growth in the near term, potentially causing havoc to whichever political party is elected, the Institute for Fiscal Studies warned.

Both Sunak and Starmer have been urged to outlay plans for the country should it suffer a downturn in the economy, with concerns that public finances are teetering.

Conservatives and Labour remain in agreement that the government must attempt to reduce its debt pile within the next five years.

The IFS said the plans are based on the economy growing by 1.5% a year on average, a figure forecast by the Office for Budget Responsibility.

Yet, economists aren't as optimistic about the UK's prospects, with the Bank of England expecting to see debt rising by a margin £28 billion between 2028 and 2029.

Isabel Stockton at the IFS labelled the target "frankly rather daft."

She added: “While forecasts might improve – we might get lucky – they might also get worse. Given that there must be at least a 50:50 chance of such a deterioration, it really is incumbent on the parties to tell us how they would respond.”

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