Rishi Sunak's Budget spending plans are “nothing like as generous as they appear”, economic analysts said today.
The rookie Chancellor delivered his first financial statement yesterday, announcing a £30billion giveaway – with £12billion targeted at easing the crisis triggered by the coronavirus.
Supporters said it finally marked the end of decade-long austerity.
But number-crunchers at the Institute for Fiscal Studies today warned the multibillion pound injection was not all it seemed because so many Whitehall departments' pots of cash were ring-fenced.
Director Paul Johnson said: “The current spending plans are nothing like as generous as they appear.
“Average annual increases of 2.8% sound substantial; take account of the need to replace EU funding and factor in planned increases for health, schools, defence and overseas aid, and there is relatively little here for other departments.
“If this spending envelope is stuck to, there are plenty of public services which will not be enjoying much in the way of spending increases over the next few years.”
The amount spent per-person for public services will “remain well below 2010-11 levels in 2024-25”, he said.
The plans also “look suspiciously front-loaded” to the first two years of the five-year Parliament, he added.
“Spending increases pencilled in for the next two years are much bigger than what follows,” warned Mr Johnson.
“This could suggest top-ups in later Budgets and hence a need for more tax or borrowing.”
The respected think tank also raised fears about spiralling debt to fund the giveaway, amid low growth predictions, uncertainty over an EU trade deal and the global economic turmoil unleashed by the coronavirus.
Mr Johnson said: “Underlying debt is forecast to rise slightly relative to national income.
“If growth turns out less positive than expected as a result of coronavirus, Brexit or any other reason, then debt could easily start moving decisively upwards.”
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