In the year since the Chancellor, Rishi Sunak, delivered his first Budget to a packed Commons chamber in March 2020, more than 135,000 people in the UK have died from Coronavirus, there have been three national lockdowns, the economy has shrunk by 9.9 per cent and Coronavirus support measures have cost around £280 billion.
The Institute for Fiscal Studies (IFS) has predicted that taxes will need to rise by more than £40 billion a year by the middle of the decade to prevent Government debt from growing out of control.
The widely-respected think tank issued the warning following the news that the Government’s Coronavirus response has cost more than £200 billion to date.
At the same time, the IFS predicts the economy will be five per cent smaller in 2024-25 than had been projected in March, creating a £100 billion loss of tax revenues.
In August, the UK’s national debt rose to about £2 trillion for the first time.
Paul Johnson, Director of the IFS said: “We are heading for a significantly smaller economy than expected pre-COVID and probably higher spending too.
“Without action, debt – already at its highest level in more than half a century – would carry on rising. Tax rises, and big ones, look all but inevitable, though likely not until the middle years of this decade.”
The prediction from the IFS has led to widespread speculation about the possibility of tax rises.