Public services in the UK may face a financial squeeze for years to come according to the Institute for Fiscal Studies (IFS), as reported by Reuters.
Finance minister Philip Hammond has indicated a softer fiscal stance toward managing the economy, but the think tank has cast doubt on the ability to ease austerity policies in the near term.
Hammond’s half-yearly budget update is due to be revealed on 3 March, with details of the money available for public spending. The UK is due to leave the European Union two weeks later, but the terms of the departure are still unclear.
The October annual budget showed Hammond giving more support to the economy, with higher spending levels. However, spending more on healthcare has left little to spare for other public services.
IFS research economist Ben Zaranko said: “This suggests yet more years of austerity for many public services – albeit at a much slower pace than the last nine years.”
Outside of health, defence and overseas aid, departments saw spending levels fall by an average of 3% per year in real terms after 2010. The outlook is for 0.4% annual falls in spending in inflation-adjusted spending, according to the IFS.
A statement from the finance ministry said: “The (finance minister) has said that hte Spending Review will take place in 2019, and that is the right moment for government to make long term funding decisions.
“Outside the (health service), total day to day departmental spending is now set to grow in line with inflation, and public investment will reach levels not sustained in 40 years in this parliament.”