Britain will face a £25bn Brexit black hole in the public finances, new research from the Institute for Fiscal Studies (IFS) has found.
An IFS report released today [Tuesday] predicts that, due to the lower growth forecasts in the aftermath of the EU referendum, Government tax receipts in 2019-20 will be £31bn less than forecast in the last budget. Assuming that the UK will no longer be paying £6bn that year into the EU budget, this will create a £25bn gap in the public finances that will have to be filled by spending cuts, tax rises, or further borrowing.
The IFS says borrowing the extra money would turn a forecast surplus of £14.9bn in 2019-20 into a deficit of £10.4bn.
Commenting for Open Britain, Pat McFadden MP said:
“There will be some who dismiss the warnings from the IFS because they come from ‘experts’ but the IFS remains one of the most authoritative economic voices in the country and their warnings should be taken very seriously.
“They paint a picture of lower growth in the future hitting the public finances hard and meaning a shortfall of £31bn in tax revenues compared to pre-budget estimates – and that’s before any potential future payments to the EU for market access.
“The Leave campaign promised a rosy economic future where everything could be paid for from our EU contribution. These figures paint a very different story. It is critical that those on the lowest incomes do not pay the economic price for Brexit.
“These warnings from the IFS underline how important it is for the UK not to damage the trading position it currently enjoys through membership of the single market with both the market access and the attraction to inward investors which that represents.”