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Tax cuts pledged by Liz Truss and Rishi Sunak won't be possible without spending cuts, economists say

The tax cuts promised by Liz Truss and Rishi Sunak in the No 10 race would require significant spending cuts. economists warn as inflation soars.

Both candidates for the Tory leadership were accused in a disastrous report by theInstitute of Fiscal Studiesfor failing to be forthright with voters about the economic crisis at hand. I'm here.

A higher-than-expected inflation rate will force him to spend an extra £23 billion next year on profits and interest on debt, the Treasury has warned. there is service.

And this suggests that rules on borrowing and debt will be broken "unless commensurate spending cuts are realized" to offset tax cuts promised by rival leaders.

"The reality is that the UK is poorer than it was last year. This makes tax and spending decisions even more difficult," said Carl Emerson, deputy director of IFS says Mr.

"In the absence of concrete measures to cut public spending, and a putative desire to control the country's finances, both Truss and Sunak believe they will cut taxes in the medium term. It's hard to make promises right.Responsibly."

In a leadership battle, former Prime Minister Sunak promises a package of more than £30 billion in combined personal and business tax cuts. By doing so, he attacks the foreign minister's "fantastic" economics.

However, despite his status as a "sound money" candidate, he has pledged to cut taxes in the near future, and before the 2024 general election he will cut the basic income tax rate of 20 pence. He promises to take a pence off. By 2030 he will cut to 16 pence.

The IFS, in its report, reflected recent warnings from the Ministry of Finance's oversight body, the Office of Budget Responsibility, He said: long-term pass".

It concludes:

Despite inflation reaching his 10.1%, the highest in 40 years, the headline for the next prime minister, Mr Truss, has faced a severe recession after doubling his tax cut plan at the party convention. A conclusion was drawn.

"I think our economy has reached a point where taxes are too high and potentially stifling growth," she told Conservative MPs in Northern Ireland. 37}

Mr. Sunak did raise inflation concerns, arguing that tax cuts "to the national credit card" without spending the money "would make inflation worse and last much longer."

He also argued that without Mr. Truss laying out a detailed plan of his own, if Mr. Truss wins power and fails to save the poor from skyrocketing energy bills, voters will lose power to the party. He warned Tories never to 'forgive'. The Bank of England says fears that it is expected to surge up to 10%, pushing the UK into recession.

Labor is calling for her six-month freeze on energy bills, and Shadow Prime Minister Rachel Reeves said: about achieving a goal.

The IFS said ultra-short-term borrowing was "not necessarily problematic," but argued that it would likely be "appropriate to fund targeted assistance." did.

"Additional pressure, likely in the tens of billions of dollars, to continue supporting households and compensating public services for high inflation," he said.