Chancellor Kwasi Kwarteng needs to find £60bn to plug a hole in the public finances and shore up confidence in the economy, the Institute for Fiscal Studies (IFS) has warned.
That figure is twice the size of the UK’s defence budget and the IFS said deep austerity measures would be required to achieve the savings.
Kwarteng has been forced to bring forward the launch of his plans to fund the £43bn tax giveaway announced in his mini-Budget.
But despite bringing his statement forward by three weeks in response to weakness in the Pound and Government bonds, market issues still remain.
Paul Johnson, IFS director, said: “The specifics of the UK Government’s fiscal strategy are under more scrutiny by financial markets than at any point in the recent past.
“The chancellor should not rely on over-optimistic growth forecasts or promises of unspecified spending cuts.
“To do so would risk his plans lacking the credibility which recent events have shown to be so important.”
The IFS projections are based on forecasts from Citigroup, which warned the economy is facing elevated inflation and a moderate but protracted recession.
