The Coalition’s fiscal plans for the next Parliament imply the largest dose of austerity anywhere in the developed world, according to an analysis published today.
The Institute for Fiscal Studies (IFS) said the budget consolidation path laid out by George Osborne’s Autumn Statement would mean a consolidation bigger than those planned in any economy in the West.
Using figures from the International Monetary Fund, the IFS said the Coalition is planning a crunch worth 3.5 per cent of GDP between 2015 and 2019.
The next biggest squeeze is projected for Republic of Ireland, where savings worth 2.9 per cent of GDP are due to be found.
France has outlined a squeeze worth 2.3 per cent of GDP. By contrast, Germany is planning no austerity over the period. And budget constraints in the US are actually due to be loosened by 0.6 per cent of GDP over the four years.
The figures highlighted the extreme nature of the fiscal consolidation pencilled in by the Coalition for the next parliamentary term, which the Office for Budget Responsibility has already highlighted are set to take public service spending as a share of GDP back down to 1930s levels.
Labour and the Liberal Democrats have laid out fiscal targets which would enable them to impose considerably less austerity in the next Parliament.
Ed Balls, Labour’s shadow Chancellor, seized on the IFS calculations yesterday.
“If the Tories win the election, Britain will face the biggest spending cuts of any major advanced economy” he said. “Instead of this extreme approach, which will put vital public services at risk, we need a balanced and fair way to get the deficit down while securing the future of our NHS.”
The IFS noted that public services have already undergone an intense squeeze under Mr Osborne’s Chancellorship, saying that it has been the longest and deepest period of consecutive cuts to public service spending per head since the Second World War.