A group of economists has questioned UK assertions that a “black hole” in the public finances will need to be filled with austerity measures and tax rises.
The Progressive Economy Forum, which campaigns to end austerity, claims that the £50bn “hole” disappears entirely if the debts are calculated differently.
The government previously used a different measure of debt, returning to that would leave £14bn spare, they say.
But experts disputed the findings, saying they would put the UK at risk.
Business leaders in Staffordshire have welcome the scrutiny in the run up to the Autumn statement. Staffordshire Chambers Chief Executive Sara Williams said the government must think long and hard about raising taxes that could adversly affect business growth and production.
The Treasury said the public finances would be assessed independently by the Office for Budgetary Responsibility (OBR).
Media discussion of the government’s tax and spending options ahead of the Autumn Statement has been dominated by talk of “black hole” in the public finances, put at anything from £35bn to £60bn, which, it is assumed, must urgently be “filled” with spending cuts or tax rises.
But the Progressive Economy Forum said that “fiscal hole” is merely the difference between an uncertain forecast – of how much the government will spend and borrow in future under current plans – and what it can afford to do if it is to hit its own targets – that debt starts to fall as a proportion of the economy three or five years from now.
If the economy grows faster or the time frame changes, the “hole” can shrink or grow dramatically, the economists said – far more than it would because of spending cuts or tax rises.
