Philip Hammond 'between rock and a hard place' ahead of crucial Budget - IFS

Posted On: 
30th October 2017

Philip Hammond’s commitment to balancing the nation's books has been thrown into turmoil after a leading think tank warned of mounting spending pressures ahead of the Budget.  

Philip Hammond is under pressure to spend more in his forthcoming November Budget, a leading think tank has said
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The Institute for Fiscal Studies described the Chancellor as being “between a rock and a hard place,” as he prepares to deliver a crucial Budget on 22 November.

The highly-respected organisation pointed to "increasingly intense" political pressure to spend more, but added that key economic indicators, such as productivity growth forecasts, may limit his options. 

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IFS deputy director Carl Emmerson said: "Does he allow higher borrowing to persist, does he add to that with more spending, or does he try to offset that with greater taxes?

"Public sector workers, the NHS, the prison service, schools and working-age benefit recipients, among others, would like more money.

"Given all the current pressures and uncertainties, and the policy action that these might require, it is perhaps time to admit that a firm commitment to running a budget surplus from the mid-2020s onwards is no longer sensible."

However, Mr Hammond told the BBC last week: "We've already moved the target for balancing the books out from 2020 to 2025, but continuing to drive down the deficit in a measured and sensible way over a period of years... has to be the right way to go."

This comes as the Chancellor is reportedly facing opposition from the Prime Minister over plans to free up green belt land to build more homes.

According to the Times, Mr Hammond has been arguing within Cabinet for months for changes to green belt planning rules, but a senior ally of Theresa May said she has ruled it out for the Budget.

Elsewhere the Chancellor is under pressure to scrap stamp duty to free up cash and boost the housing market.

The Adam Smith Institute described the tax as “almost as bad as setting fire to the money instead of raising it in tax” and said it should be “consigned to the dustbin of history”.