LONDON (Reuters) - Chancellor of the Exchequer George Osborne will have to take a bigger axe to ministerial budgets or make further deep cuts to welfare to meet his target of a budget surplus before the end of the decade, a leading think-tank said.
Osborne said on Thursday he was aiming for a surplus in 2018/19 and warned of tough choices ahead to achieve it. The Institute for Fiscal Studies said on Friday austerity would need to tighten even more to reach that goal.
IFS director Paul Johnson said spending on central government public services - which exclude welfare - would have to be cut by 20 percent by 2018/19 from their level before Osborne began his austerity programme, deeper than the 8 percent reduction so far.
Put another way, Osborne’s plans would require that public-service spending be cut 3.7 percent a year between April 2016 and March 2019, more than the 2.3 percent a year in the preceding five-year period, Johnson said.
Alternatively, the government could cut welfare a further 12 billion pounds ($19.62 billion) a year by 2018/19, equivalent to about 50 percent of welfare savings already enacted by Osborne.
“That’s the scale of what remains to be done if the Chancellor carries through his plans,” Johnson said, referring to Osborne by his title of chancellor of the exchequer.
Reporting by William Schomberg; Editing by Larry King