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. Towards a Communities Agenda 2.0

    Andy Burnham’s arrival in Downing Street creates an opportunity to go much further on the communities agenda than we’ve seen up to now. So what should more ambition look like in practice?
  2. Young male delivery cyclist working part-time, riding through city streets with food backpack on.

    Raising the bar: Strengthening living standards while banning exploitative zero-hours contracts

    Labour’s manifesto committed to banning exploitative zero-hours contracts as part of sweeping upgrades to workers’ rights.
  3. The Bank of England is watched over by a statue of the Duke of Wellington seated on his horse

    Beyond headroom: Why we need a better fiscal framework to fix the UK’s long term problems

    There has been long-standing debate about the UK’s fiscal rules and fiscal framework.