Britain will have borrowed £64bn more than expected by the time of the next general election after weak growth played havoc with George Osborne's deficit reduction plan, the Institute for Fiscal Studies has warned.
The UK's leading tax and spending experts said on Wednesday the public finances would be in a worse state in 2015 than permitted under plans made by the previous Labour government to tackle the deficit.
In its "green budget" annual healthcheck on the public finances, the IFS said the chancellor was allowing extra borrowing to take the strain during the current parliament at the expense of another bout of austerity after the 2015 election.
It said on current plans those departments not protected by the government's ringfence would see their budgets fall by a third in real terms between 2010-11 and 2017-18.
Public sector employment would fall by 1.2 million over the same period, it added. That is 300,000 more lost jobs than the 900,000 figure produced by the Office for Budget Responsibility last December.
Paul Johnson, the IFS director, said: "As economic performance and forecasts have worsened the chancellor has followed a dual strategy. He is allowing borrowing to increase substantially in this parliament – allowing the automatic stabilisers to work – whilst promising another dramatic dose of public spending cuts in the next parliament."
The Government has protected the NHS, schools and overseas aid from cuts during the current parliament.
Johnson said it looked unlikely that the unprotected departments would be forced to accept a one third cut in their budgets.
"A more likely scenario is that other choices will be made after the next election. Taxes could rise, hitherto protected elements of public spending, like the NHS or pensions, could be hit, or the date at which we reach fiscal balance will be pushed further out," he predicted.
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