The Winter is Coming: The outlook for the public finances in the 2016 Autumn Statementanalysis stated that even were this offset by ceasing to pay £6bn a year into the European Union budget, there would be a net increase in borrowing of £25bn, which “would imply a deficit of £14.9bn, rather than the £10.4bn surplus that George Osborne was aiming for”, it said.
This finding was based on the assumption that all spending cuts announced by Osborne were delivered – including what the IFS called “£3.5bn of unspecified ‘efficiencies’ pencilled in for 2019–20” – and took no account of income tax cuts promised in the Conservative manifesto at the last general election.
Chancellor Philip Hammond would face two big decisions, the IFS said.
Firstly, he could introduce discretionary tax cuts or spending increases to boost the economy, but if growth were lower as a result of Brexit he should also prepare for more austerity in the next parliament.