Boris Johnson warned he faces HUGE struggle to keep promise not to raise taxes

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But Cyrille Lenoel said the emergence of several coronavirus vaccines may save the Prime Minister – by helping the economy bounce back more quickly than previously anticipated. Mr Lenoel, a senior economist with the National Institute of Economic and Social Research (NIESR) was speaking after the publication of a gloomy forecast by the Office for Budget Responsibility, which suggested the national debt was on course to increase to £2.8trillion by 2025.

In order to stop it increasing as a proportion of GDP, the analysis said the Government would need to find between £21billion and £46billion in extra cash.

Mr Johnson’s official spokesman was quick to insist the Prime Minister remained committed to the Tory campaign commitment not to increase Income Tax, VAT or national insurance contributions prior to 2024 – in other words, before the next general election.

However, Mr Lenoel suggested it might not be quite as straightforward as Mr Johnson envisaged.

He said: “We already have a public sector pay freeze and a reduction in foreign aid.

“But such measures will not be adequate to deal with the deficit.”

Mr Lenoel suggested the incoming vaccines announced by Pfizer, Moderna and AstraZeneca had the potential to change the landscape significantly.

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He explained: “To defend Boris Johnson’s position, one scenario that is possible given that we may have a vaccine by next year is that the economy may recover more quickly than expected – not just in the UK but across the world.”

However, even if the economy bounced back faster than anticipated, the most optimistic scenarios still envisaged a sizeable deficit which was unlikely to be bridged by making efficiencies, he warned.

Consequently, in the final analysis, Mr Johnson may be left with little option but to raise taxes in some form to increase revenue coming into the Government’s coffers.

However, Mr Lenoel also stressed introducing such measures too early could prove counterproductive, pointing out that it would be better to wait until more people were in employment to widen the tax base.

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In contrast to the Prime Minister, Mr Sunak earlier this week said Government spending levels were unsustainable in the long term, hinting that taxes would need to rise once the pandemic was over.

He said: “There are record peacetime highs in borrowing and debt, and the forecasts that were set out yesterday show us on a path where that continues to be at a very elevated level, so that’s not a sustainable position.”

Although he refused to comment specifically on tax rises, he added: “Once we get through this and we have more certainty about the economic outlook, we’ll need to look at how we can make sure we have a strong set of public finances.”

In his spending review, Mr Sunak announced a package of measures amounting to £55 billion in total.

Commitments included £18 billion for testing, personal protective equipment and vaccines; £3 billion to help the National Health Service cope with added pressures; in excess of £2 billion towards transport; more than £3 billion for local authorities; and £250 million towards helping homeless people.

His announcements took the UK’s total spending on measures aimed at combating the pandemic to roughly £300billion.

Commenting, Mr Lenoel’s colleague, NIESR director Professor Jagjit Chadha, said: “The Chancellor’s One Year Spending Review provides welcome and much-needed support for many sectors of the economy suffering their largest contraction in modern times.

“The furlough and business bounce back loan schemes are good examples of how support has been provided but on a time-limited basis.

“Unfortunately, the temporary nature of many of the plans announced seem unlikely to be able to address long-standing deficiencies in the economic performance of the UK, which have so sadly been exposed by the COVID crisis.

“We urgently need a fiscal framework that addresses the issue of how to manage an economy in periods of rapid and more normal adjustment to shocks and yet retains strong foundations of sound money.

“This means a consistent multi-year approach to the capital gap and to addressing regional and household inequalities.

“Policy by sound bite and leak does not a long term plan make.”

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