The Institute for Fiscal Studies (IFS) said yesterday that the chancellor has
only a 50% chance of meeting his ‘golden rule’ and must increase taxes to raise
an extra £2.5bn to meet his fiscal targets.
It also said that there was a 44% chance that Gordon Brown would exceed the
limit on the national debt of 40% of GDP – his second rule on sustainable
The influential think-tank’s report said that despite the ‘the least generous
spending review under Labour to date’, the chancellor had to make some ‘tough
choices’ about the economy as slowing productivity growth, inadequate saving and
a weak housing market put pressure on his forecasts.
The IFS said it expected the Brown to break his golden rule to borrow only
for investment, not current spending, by £0.7bn when the economic cycle ends in
2008-09, and that he would not meet it with £12.8bn to spare, as last month’s
Pre-Budget Report indicated.
The IFS said the predicted breach of the rule was ‘economically
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