By David Milliken
LONDON (Reuters) - British finance minister Jeremy Hunt appears to have delayed the "properly tough" decisions needed to balance the public finances, possibly in the hope of an economic upturn that will reduce the need for a painful squeeze, a think-tank said.
"Hemmed in by rising interest payments and poor growth prospects, the chancellor decided to allow borrowing to rise, and to put off properly tough decisions for another couple of years," Paul Johnson, director of the Institute for Fiscal Studies (IFS), said on Friday.
"He may hope that things will look better by then, or perhaps that it will be somebody else's problem."
Hunt announced 55 billion pounds ($66 billion) of fiscal tightening on Thursday to take full effect by 2027/28.
But while taxes will start to rise immediately, almost all spending cuts will be delayed until after 2024, when the next national election is expected. The IFS said Hunt's spending plans from 2025 looked "implausibly tight".
Britain's opposition Labour Party has a large lead over Prime Minister Rishi Sunak's Conservatives, which grew significantly after fiscal plans from Sunak's predecessor, Liz Truss, sparked market turmoil in September and October.
Britain's Office for Budget Responsibility forecast that tax as a share of GDP would rise to 37.1% of national income in five years' time from 33.1% now - the highest sustained level since World War Two, though still low by most European standards.
Johnson said he expected the "new era" of higher taxes would prove permanent.
"I would be most surprised if the tax burden gets back down to its long term pre-COVID average at any time in the coming decades. Higher taxes look to be here to stay," he said.
Britain's economy is also wrestling with inflation at a 41-year high of 11.1%, fuelled largely by a surge in gas prices after Russia's invasion of Ukraine. That threatens to cause the biggest fall in living standards since records began in the 1950s.
"The truth is we just got a lot poorer. We are in for a long, hard, unpleasant journey - a journey that has been made more arduous than it might have been by a series of economic own-goals," Johnson said.
The IFS criticised Hunt's decision to delay by two years reforms to social care, which it feared would be a "death knell" for the proposals, and also highlighted a surge in spending on disability benefits.
($1 = 0.8390 pounds)