UK parties maintain 'conspiracy of silence' on post-election budget challenges, think-tank says

Both Keir Starmer's Labor Party and Prime Minister Rishi Sunak's Conservatives are maintaining a “conspiracy of silence” on the scale of budget challenges which will face Britain's next government, a leading think-tank said on Monday.

The non-partisan Institute for Fiscal Studies said neither party had made clear how they would implement the 10-20 billion pounds ($12.7 billion-$25.3 billion) of spending cuts pencilled in March's annual budget, or if they would raise taxes instead.

A 50 billion pound surge in annual debt interest payments, rising health and defence spending, the cost of cutting greenhouse gas emissions and the effects of an ageing population and slow growth were all big headwinds for whoever is in power after July 4's election.

“These raw facts are largely ignored by the two main parties in their manifestos,” IFS Director Paul Johnson said.

Unless growth turned out to be unexpectedly strong, the party that formed next government would either have to raise taxes more than it had said in its manifesto, cut some areas of public spending or allow the national debt to keep rising.

“The 'conspiracy of silence' about all of this has been maintained,” Johnson said.

Since the last election in 2019, taxation as a share of GDP has risen to its highest since just after World War 2, largely because the government has not raised thresholds for paying tax in line with inflation.

Both parties have ruled out raising the rate of all Britain's main taxes, including income tax and VAT.

“Taken at face value, Labour's promise of 'no tax increases on working people” rules out essentially all tax rises. There is no tax paid exclusively by those who don't work. Who knows what this pledge is really supposed to mean?” Johnson said.

Reuters