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Thinktanks predict austerity could last beyond 2020

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The Institute for Government and Institute for Fiscal Studies have warned austerity could last beyond 2020 as the Government turns from reducing the deficit to cutting its debt.

At a joint IFS and IfG briefing in London last week ahead of this month’s 2015/16 spending review, IfG deputy director Julian McCrae said the next two general elections could be fought along austerity lines.

McCrae said: “The real issue is where we get to in 2017/18. We are reducing the deficit but the UK will still have around 90 per cent debt levels in 2018 which is quite an uncomfortable level in public finances.

“After dealing with the deficit problem the Government then has to deal with its debt problem. If you think in these terms austerity could easily last beyond 2020.”

IFS director Paul Johnson agreed austerity could last beyond 2020 as the Government gets to grips with rising healthcare costs, pensions spending and debt interest payments.

National Institute of Economic and Social Research director Jonathan Portes says: “It is possible that austerity could last beyond 2020 but it is by no means certain or necessary as growth can deal with most of the deficit so that should be the priority.”

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