The UK Will Need to Find £27bn to Fill Economic Black Hole Warns Watchdog

THE UK Will Need to Find £27bn to Fill Economic Black Hole Warns Watchdog.

The UK government will need to find up to £27bn worth of spending cuts or tax rises by 2024 to put the public finances back on to some sort of a sustainable footing, the Treasury’s spending watchdog has warned.

In a forecast for the public finances that predicted long-lasting damage to the economy following the present COVID-19 crisis, the Office for Budget Responsibility (OBR) said the spending gap based on its most likely estimate was unlikely to be filled by stronger economic growth, leaving ministers to make tough decisions in the years ahead.

Rishi Sunak has already announced a public sector pay freeze and a cut to foreign aid spending as the UK battles soaring debt and unemployment amid the huge COVID-induced economic shrinkage.

Mr Sunak told MPs the Office for Budget Responsibility (OBR) expects unemployment to rise to a peak of 2.6 million people next summer – a level of 7.5%. The OBR has also forecast an 11.3% contraction in the UK economy this year – the largest fall in output for more than 300 years, the chancellor said.

Richard Hughes, the chairman of the OBR, said in a report published following the spending review that extra measures announced by the chancellor since July totalling £86bn this year and £40bn next year had saved the economy from being “materially weaker”.

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