Former minister Pat McFadden warns poorest may pay the price of Brexit

Written by James Millar on 8 November 2016 in Diary
Diary

Concerns over where Chancellor will find missing £25bn after leading think tank report

Pat McFadden, a former business minister and prominent Remain campaigner, has warned that Brexit is set to cost the country after the Institute for Fiscal Studies appeared to bear out pre-referendum economic warnings.

And he said the Treasury must not burden the worst off in society as a result.

He said: “The Leave campaign promised a rosy economic future where everything could be paid for from our EU contribution. These figures paint a very different story. It is critical that those on the lowest incomes do not pay the economic price for Brexit."

Leading think tank the IFS has published a new report claiming Chancellor Philip Hammond faces a financial headache at his first Autumn Statement later this month.

The report, titled Winter is Coming, says a combination of slower growth and higher inflation in the wake of the Brexit referendum will have a marked impact on tax receipts.

George Osborne predicted the nation would be £10bn in the black by 2019-20 in his last budget as chancellor. But the IFS, widely respected for their budget analysis, now says the government is more likely to be around £14bn in the red by then.

One of the report's authors, Thomas Pope, said: “The new chancellor’s first fiscal event will not be easy. Growth forecasts are almost sure to be cut, leading to a significant increase in the deficit even if all the very challenging spending cuts currently planned are in fact delivered.

“Given the levels of uncertainty he might be wise to respond cautiously for now."

Shadow chancellor John McDonnell took the opportunity to tell the government not to extend austerity. He said: “This report further highlights the past six years of Tory failure on the economy that Phillip Hammond supported every step of the way, and which has meant our economy is not properly equipped for any downturn that may arise from Brexit.

“It is time the Chancellor learnt the lessons of George Osborne and rather than repeat them. He could start by listening to Labour’s calls for a credible fiscal framework and serious, sustainable investment in our economy, so that no one and no community is left behind.”

 

 

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