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A leading U.K. think tank offered a damning analysis of both the Conservatives’ and Labour’s election pledges, and warned voters to expect higher taxes than either party has outlined.
In a brutal assessment of both manifestos for the Dec. 12 vote, the Institute for Fiscal Studies said that “neither is a properly credible prospectus.”
Prime Minister Boris Johnson’s Conservatives and Jeremy Corbyn’s Labour have outlined vastly different offerings for voters. While Corbyn is promising a generational shift in public spending along with sweeping nationalization plans, the ruling party is presenting a more prudent approach, offering themselves up as the responsible alternative to Labour’s radical ideas.
But the IFS sees problems with both manifestos. In its assessment, the Tories will end up spending more than planned, and so will have to raise taxes or borrow more, and Labour won’t be able to deliver on the investment plans on the scale it imagines. In the longer term, Labour would also need to raise more funding, and the IFS says it would have to hike income taxes on more than just the top 5% of earners.
The analysis comes a day after a much-anticipated poll put the Tory Party on track to win its biggest majority in more than three decades. The poll suggested it will win 359 of the 650 seats in Parliament, a gain of 42 on the last election -- and a majority of 68 -- while Labour will drop more than 50 seats to 211.
Much of what’s planned in the manifestos, and its impact on the public finances, depends on the performance of the economy. Brexit is a huge factor in that equation, and the IFS notes that if the Conservatives retain power and implement Brexit at the end of January, there’s still the huge task of negotiating a settlement by the end of 2020. Failure could push the budget deficit to 4% of output, and the debt ratio “would once again rise sharply.”