---
title: "Thinktank: UK faces a £33bn financial hole or a return to austerity."
publisher: "Stockmark.IT"
author: "Stockmark.IT Website"
published: "2024-06-05T03:47:57+00:00"
modified: "2024-06-05T03:47:57+00:00"
date: 2024-06-05
canonical: "https://stockmark.it/thinktank-uk-faces-a-33bn-financial-hole-or-a-return-to-austerity/"
category: "Financial"
categories: ["Financial", "Government", "UK Inflation"]
image: "https://i0.wp.com/stockmark.it/wp-content/uploads/stencil.default-89-1.jpg?fit=1200%2C800&quality=89&ssl=1"
format: "news"
language: "en-GB"
---

# Thinktank: UK faces a £33bn financial hole or a return to austerity.

**Published:** June 5, 2024
**Author:** Stockmark.IT Website
**Categories:** Financial, Government, UK Inflation
**Featured image:** ![World War II British ration book and coupons. "Ministry of Food Ration Book (Junior) from Stockmark.it](https://i0.wp.com/stockmark.it/wp-content/uploads/stencil.default-89-1.jpg?fit=1200%2C800&quality=89&ssl=1)

---

A think-tank warned that Britain’s new government would need to make up a deficit of up to £33bn  in the public finances, unless they were willing to push through another round of severe austerity.

The Resolution Foundation stated that the debate between Labour and Conservative about the funding of pledges is “detached” from reality, with election promises being based on cutbacks which would be difficult to deliver.

The thinktank stated that both main parties are committed to reducing the debt as a percentage of national income in five years, but the higher interest payments for debts and slower than expected productivity growth would make this more difficult.

The Office for Budget Responsibility (the Treasury’s tax-and-spending watchdog) has estimated that government will meet its target debt-to GDP with just a spare. However, Resolution Foundation stated that the winning party of the general election must choose between raising taxes and cutting spending in order to reach its debt target.

The International Monetary Fund warned that the UK economy would be left with a £30bn hole after the election in its health check last month.

James Smith, research director at the Resolution Foundation, stated: “The state and future of public finances have dominated the campaign, with inevitable disagreements over the funding of each pledge. This narrow focus could distract the electorate away from the larger question of how the parties would handle the uncertainty facing the public finances.

This question is important, because whoever wins could face a fiscal gap of £12bn if today’s uncertainty turns into bad news following the election. If the next government is determined to avoid another round of austerity measures, this black hole could reach over £33bn.

Budgets for NHS England, Education, Defence and the Foreign, Commonwealth and Development Office have been ring-fenced, but inflation-adjusted, this would mean that unprotected departments, such as Justice, the Home Office and Local Government, would see spending cuts of 13% per person between 2024-25 and 2030-31. This would be equivalent to £19bn in cuts, which is nearly three quarters of what was cut during the 2010-2015 Parliament.

The Resolution Foundation stated that it would be difficult to implement these cuts when public services are already in a state of collapse and the public wants more public spending, not less.

The next government may miss the target of debt reduction by 30 billion pounds sterling. The fiscal debate was “detached” from reality because of history and politics, it said.

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