UK faces a long way to end financial crisis: IFS

Britain still has “a long way to go” so as to recover from the financial crisis gripping the country, says a London-based economic think tank.

The Institute for Fiscal Studies (IFS) said in its annual Green Budget on Wednesday that the austerity drive is yet to come in the UK.

The research institute said spending cuts of £51.4 billion, or 14.1 percent, are needed in the next parliament so that the country can meet plans announced by Chancellor George Osborne at Autumn Statement in December 2014.

It added that the UK’s “fiscal consolidation” would be the largest among the 32 advanced economies over the next four years.

IFS director Paul Johnson slammed Osborne, saying, “He deliberately allowed the forecast deficit to rise as growth undershot in the early years of the parliament.”

“He has not cut spending in real terms as much as planned, as inflation has undershot. And he has cut departmental investment spending by only half as much as he originally planned,” Johnson added.

This means Osborne or his successor “will still have a lot of fiscal work to do” and “the public finances have a long way to go before they finally recover from the effects of the financial crisis.”

The Green Budget, which looks at options and issues ahead of the next month’s budget, highlights the economic decision British voters are to make in May’s general election: a Tory-led government that would impose bigger cuts or a Labour government with a higher public sector debt.