NIESR warns Burnham and Healey’s Budget could miss targets by £30bn

The National Institute of Economic and Social Research (NIESR) says the first Budget under Andy Burnham and Chancellor John Healey failed a basic credibility test because it postponed decisions on reducing borrowing. It warns that the Government’s plans depend too heavily on favourable economic conditions and could leave the public finances under greater pressure.

Although the Budget met the borrowing targets on paper, its £15 billion buffer has shrunk from £24 billion and relies on future spending restraint that NIESR doubts will be delivered. If planned cuts are softened at next year’s spending review, the Government could miss its targets by £30 billion. The report also points to £144 billion in debt interest this year, inflation eroding departmental budgets by £7 billion annually, and a further £11 billion needed for defence.