Future proof: Britain in the 2020s, an IPPR explainer - Deficit

Article

Brexit will put the public finances under significant short-term strain. Two longer-term trends will further reshape the state and health of the public finances in the 2020s.

Falling expenditure as a share of GDP will reduce the size of the state while the composition of expenditure will shift towards older people and health spending. At the same time, the deficit will strike back. Due to demographic change, a structural tax gap will emerge by the mid-2020s on current trends. Fiscal fragility, whether due to weak economic growth, falling rates of migration, or stagnant wages, are all further risks. Given this, a strategic review of taxation – both of revenue and expenditure – will be critical if the public finances are to sustainably meet the challenges of the future.

Related items

  1. A row of international flags flying in the breeze outside a building in Paris on a sunny day

    Diversifying diplomacy: UK strategy in a fragmenting world

    How the UK might build more durable international partnerships in energy, defence and technology.
  2. A 'To Let' sign outside a row of houses on a residential street, UK

    High housing costs in the private rental sector: The case for action

    45 per cent of all private renters in the UK have unaffordable rents. It's time for the government to act to limit rent increases.
  3. A wide shot of several large commercial vessels, including oil tankers and a survey boat, floating on turquoise water. In the background, an industrial shoreline with numerous smokestacks and refinery infrastructure is visible under a cloudy sky. Concept of global logistics, maritime industry, and international trade.

    Price caps and economic stability: How to manage the Iran war energy shock?

    The Iran war energy shock will impose significant costs on the UK economy, even if the government does not offer a universal support package.