London Daily

Focus on the big picture.
Wednesday, Sep 17, 2025

Liz Truss's plan for tax cuts to boost economy 'a gamble at best', says leading think tank

Liz Truss's plan for tax cuts to boost economy 'a gamble at best', says leading think tank

The IFS has warned that the prime minister is putting the public finances on an "unsustainable path" with her plan to slash taxes while increasing borrowing to fund energy support packages.

Liz Truss is putting the public finances on a "unsustainable path" with her plans to slash taxes while capping energy bills, a leading economic think tank has warned.

The Institute for Fiscal Studies (IFS) has calculated that the combination of higher spending and tax cuts means government borrowing is expected to hit £100bn a year - more than double the official forecasts last March.

With debt potentially set on an "ever-rising path", the IFS said the prime minister's repeated claims that reducing tax rates would lead to sustained economic growth was "a gamble at best".

IFS deputy director Carl Emmerson said: "Under the new prime minister's plans, the fiscal targets legislated in January would be missed and while we would get to enjoy lower taxes now, ever-increasing debt would eventually prove unsustainable."

The warning came just hours after Ms Truss told bosses of American multinationals that her tax cuts are "just the start" of a long-term plan to "simplify" Britain's taxes as she tries to lure investment.

As well as reversing the hike in national insurance contributions and scrapping a planned increase in corporation tax, it has been reported that the stamp duty could be cut when Chancellor Kwasi Kwarteng sets out his mini-budget on Friday.

Ms Truss told leaders of firms including Google, Microsoft and JPMorgan Chase that the chancellor would be laying out "simplification" measures that would "get more businesses going in the UK" and also "encourage more people to go into work".

"While this is just the start, our long-term plan is to simplify Britain's taxes and to make us a better place to invest and be unashamedly pro-business," the prime minister said, according to a transcript provided by Number 10.

The chancellor is also due to lay out the expected costs of the energy price freeze - to be funded by government borrowing - in his fiscal statement on Friday.

The IFS said the final bill for the energy price cap was "highly uncertain" but could be £100bn over the next two years.

It was also announced today that wholesale energy costs for businesses will be slashed by up to half their expected price through the winter months - in a move expected to cost tens of billions of pounds.

Meanwhile, the reduction in revenue from the changes to national insurance and corporation tax will cost the exchequer around £30bn a year.

At the same time, rising inflation is pushing up spending on debt interest as well as state pensions and most working age benefits, while Ms Truss has also pledged to increase defence spending to 3% of national income by the end of the decade.

As a result, the IFS said that even after the energy price guarantee is assumed to have expired in October 2024, borrowing would be running at around £100bn a year - more than £60bn higher than was forecast in March.

At around 3.5% of national income, that would leave borrowing nearly double the 1.9% it averaged in the 60 years to the global crash in 2008.

Almost half this increase would be due to the tax cuts - while if they do not go ahead the current budget would be forecast to remain in balance, the IFS said.

Ms Truss has faced criticism that her tax cuts will disproportionately benefit the rich - but she told Sky News she is willing to be 'unpopular' in order to get the economy growing again.

However, the IFS said she "should not underestimate the scale of the challenge".

The think tank said: "There is no miracle cure, and setting plans underpinned by the idea that headline tax cuts will deliver a sustained boost to growth is a gamble, at best."

Newsletter

Related Articles

0:00
0:00
Close
Hong Kong Industry Group Calls for HK$20 Billion Support Fund to Ease Property Market Stress
Joe Biden’s Post-Presidency Speaking Fees Face Weak Demand amid Corporate Reluctance
Charlie Kirk's murder will break the left's hateful cancel tactics
Kash Patel erupts at ‘buffoon’ Sen. Adam Schiff over Russiagate: ‘You are the biggest fraud’
Homeland Security says Emmy speech ‘fanning the flames of hatred’ after Einbinder’s ‘F— ICE’ remark
Charlie Kirk’s Alleged Assassin Tyler Robinson Faces Death Penalty as Charges Formally Announced
Actor, director, environmentalist Robert Redford dies at 89
The conservative right spreads westward: a huge achievement for 'Alternative for Germany' in local elections
JD Vance Says There Is “No Unity” with Those Who Celebrate Charlie Kirk’s Killing, and he is right!
Trump sues the 'New York Times' for an astronomical sum of 15 billion dollars
Florida Hospital Welcomes Its Largest-Ever Baby: Annan, Nearly Fourteen Pounds at Birth
U.S. and Britain Poised to Finalize Over $10 Billion in High-Tech, Nuclear and Defense Deals During Trump State Visit
China Finds Nvidia Violated Antitrust Laws in Mellanox Deal, Deepens Trade Tensions with US
US Air Force Begins Modifications on Qatar-Donated Jet Amid Plans to Use It as Air Force One
Pope Leo Warns of Societal Crisis Over Mega-CEO Pay, Citing Tesla’s Proposed Trillion-Dollar Package
Poland Green-Lights NATO Deployment in Response to Major Russian Drone Incursion
Elon Musk Retakes Lead as World’s Richest After Brief Ellison Surge
U.S. and China Agree on Framework to Shift TikTok to American Ownership
London Daily Podcast: London Massive Pro Democracy Rally, Musk Support, UK Economic Data and Premier League Results Mark Eventful Weekend
This Week in AI: Meta’s Superintelligence Push, xAI’s Ten Billion-Dollar Raise, Genesis AI’s Robotics Ambitions, Microsoft Restructuring, Amazon’s Million-Robot Milestone, and Google’s AlphaGenome Update
Le Pen Tightens the Pressure on Macron as France Edges Toward Political Breakdown
Musk calls for new UK government at huge pro-democracy rally in London, but Britons have been brainwashed to obey instead of fighting for their human rights
Elon Musk responds to post calling for the murder of Erika Kirk, widow of Charlie Kirk: 'Either we fight back or they will kill us'
Czech Republic signs €1.34 billion contract for Leopard 2A8 main battle tanks with delivery from 2028
USA: Office Depot Employees Refused to Print Poster in Memory of Charlie Kirk – and Were Fired
Proposed U.S. Bill Would Allow Civil Suits Against Judges Who Release Repeat Violent Offenders
Penske Media Sues Google Over “AI Overviews,” Claiming It Uses Journalism Without Consent and Destroys Traffic
Indian Student Engineers Propose “Project REBIRTH” to Protect Aircraft from Crashes Using AI, Airbags and Smart Materials
French Debt Downgrade Piles Pressure on Macron’s New Prime Minister
US and UK Near Tech, Nuclear and Whisky Deals Ahead of Trump Trip
One in Three Europeans Now Uses TikTok, According to the Chinese Tech Giant
Could AI Nursing Robots Help Healthcare Staffing Shortages?
NATO Deploys ‘Eastern Sentry’ After Russian Drones Violate Polish Airspace
Anesthesiologist Left Operation Mid-Surgery to Have Sex with Nurse
Tens of Thousands of Young Chinese Get Up Every Morning and Go to Work Where They Do Nothing
The New Life of Novak Djokovic
The German Owner of Politico Mathias Döpfner Eyes Further U.S. Media Expansion After Axel Springer Restructuring
Suspect Arrested: Utah Man in Custody for Charlie Kirk’s Fatal Shooting
In a politically motivated trial: Bolsonaro Sentenced to 27 Years for Plotting Coup After 2022 Defeat
German police raid AfD lawmaker’s offices in inquiry over Chinese payments
Turkish authorities seize leading broadcaster amid fraud and tax investigation
Volkswagen launches aggressive strategy to fend off Chinese challenge in Europe’s EV market
ChatGPT CEO signals policy to alert authorities over suicidal youth after teen’s death
The British legal mafia hit back: Banksy mural of judge beating protester is scrubbed from London court
Surpassing Musk: Larry Ellison becomes the richest man in the world
Embarrassment for Starmer: He fired the ambassador photographed on Epstein’s 'pedophile island'
Manhunt after 'skilled sniper' shot Charlie Kirk. Footage: Suspect running on rooftop during panic
Effective Protest Results: Nepal’s Prime Minister Resigns as Youth-Led Unrest Shakes the Nation
Qatari prime minister says Netanyahu ‘killed any hope’ for Israeli hostages
King Charles and Prince Harry Share First In-Person Moment in 19 Months
×