AbstractThe austerity programme of the coalition government knocked at least one percent per year off growth in the first two years of this Parliament. In retrospect, this looks like a mistake and the slower pace of austerity in 2012 to 2013 and thereafter was welcome (as was the setting up of the Office for Budget Responsibility). The plans in the 2014 Autumn Statement are to accelerate the cuts in spending on public services over the next five years, until it reaches the lowest level since at least 1948. Other parties also plan big reductions although at a much slower pace and tempered by tax rises. In reality, it is likely that whoever wins the next election will increase taxes more than has been advertised - just as has happened after every election since 1992.
Wednesday 11th March 2015
Austerity: Post-election tax rises in prospect to meet deficit reduction targetsNew #ElectionEconomics policy briefing from the Centre for Economic Performance
It is likely that there will be tax increases after the election whoever wins, concludes a new report from the Centre for Economic Performance (CEP), the latest in a series of background briefings on the policy issues in the May 2015 UK general election. Professor John Van Reenen, CEP's director and author of the report, notes that every general election since 1992 has been followed by net tax rises of more than £5 billion. Such an outcome seems all the more probable with each of the three main parties' policy proposals on 'austerity' promising to balance the cyclically adjusted current budget by 2017-18. The CEP Election Analysis surveys the evidence on the effects of 'fiscal consolidation' (cutting public spending and raising taxes) on economic growth, the austerity record of the coalition government, and the parties' fiscal plans after 2015. Among the findings:
"All parties should be more honest about the size and shape of tax rises and spending cuts after the election.
"A quarter of all income tax revenue comes from just 0.5% of the adult population. A one percentage point rise in all rates of income tax would be progressive and raise £5.5 billion."
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