The think tank’s latest Green Budget reports warns that ‘high levels of indebtedness, failure to stimulate growth, and high borrowing costs’ are likely to lead to a protracted period of high taxes and tight spending.

While the Tories are busy promising tax cuts, there is no room for tax cuts or spending rises because the economy is in such a ‘horrible fiscal bind’, an influential think tank has warned.

The Institute for Fiscal Studies (IFS), says that the UK economy and public finances are in such an awful state that tax cuts could prove “unsustainable” and “ultimately mean a protracted recession” as interest rates are forced even higher.

This is the dire state of the UK economy after 13 years of Tory rule, with the IFS also warning that the economy is expected to endure a shallow recession next year.

The think tank’s latest Green Budget reports warns that ‘high levels of indebtedness, failure to stimulate growth, and high borrowing costs’ are likely to lead to a protracted period of high taxes and tight spending.

Paul Johnson, IFS director, said: “With taxes at record levels, and government revenues forecast to exceed non-interest spending for the first time in a generation, you might expect plenty of room for either tax cuts or spending increases.

“But poor growth and very high spending on debt interest over the next few years mean that the national debt is stuck at close to 100% of national income, even with tight spending settlements and further big tax rises in the pipeline,” he added, warning of “a protracted period of high taxes and tight spending.”

It comes after Chancellor Jeremy Hunt hinted at tax cuts during the summer, with Michael Gove also saying he would like to see tax cuts ahead of the next election.

But be under no illusion, the Tories have wrecked the economy with very little room for manoeuvre on tax cuts.

Basit Mahmood is editor of Left Foot Forward

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