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Ending austerity would mean borrowing an extra £33billion a year, says IFS

LONDON July 13: Ending austerity would mean borrowing an extra £33billion a year and leave the economy vulnerable to shocks from Brexit, a respected think-tank warned yesterday.
The Institute for Fiscal Studies (IFS) said abandoning plans for further spending cuts and tax rises would mean missing the target of wiping out the deficit by the middle of the next decade.
It would also potentially leave the economy vulnerable to any shocks from Brexit.
However, keeping the deficit at its current level of 2.4 per cent would still bring debt down as a share of GDP over the 'long term' as long as UK plc kept growing as expected.  
The IFS analysis sets out in stark terms the choices facing the Theresa May and Chancellor Philip Hammond in the Budget this autumn.
It also raises questions for Labour, which proposed far higher spending in its election manifesto that the IFS warned would leave a £30billion black hole in government finances.
The PM and Mr Hammond are coming under intense pressure to ease restrictions on spending after a disastrous election result that robbed the Tories of their majority.
Tory MPs and even Cabinet members have openly joined calls to lift the 1 per cent cap on pay rises for public sector workers - which has been in force since 2013.
But the IFS pointed out that public sector employees were still earning on average 13 per cent more per hour than those in the private sector.
Their earnings surged ahead as they escaped savage curbs in the wake of the credit crunch, but have since been reined in.