Brits to be £10k worse off as state spending set to soar to £1.5trn | Politics | News

State spending will hit £1.5trillion by 2029-30 as a result of Labour’s Budget decisions leaving Brits £10,000 worse off, the Centre for Policy Studies has warned.

The think tank co-founded by Margaret Thatcher claims that Sir Keir Starmer’s Government is squeezing living standards.

It warns that without a surge in growth the nation faces “a painful, miserable few years”. Chancellor Rachel Reeves’s has put the country, it claims, on track to become a “high-tax, high-spend nation”.

With NHS and social care funding due to pass £200billion, the CPS researchers say this is on a par with the GDP of New Zealand or Greece.

It cautions that unless reforms to the planning system unlock a “growth bonanza” the country faces “another decade of virtual stagnation in living standards”.

It says that Labour has “reverted” to the view that the state should direct the economy – and it warns that business investment will be “crowded out” with the Government trying to “pick winners”.

The CPS estimates Britons in 2029 will be around £10,000 worse off than they would have been if growth had recovered to levels before the 2008 financial crisis.

Higher borrowing, it states, means a debt crisis before 2029 is a “real possibility”.

And its experts are concerned that the hike in employers’ national insurance could result in “roughly 52,000 fewer people in work”.

Robert Colvile, the think tank’s director, said: “This is a Budget which privileges the public sector over the private sector – with the impact on growth that you’d expect from that. The OBR is clear that the Budget will hit private sector activity, which is exactly what you’d expect when you load a £25billion tax rise on to business and employment.

“More worryingly, this Budget significantly accelerates Britain’s journey to being a high-tax, high-spend nation, with both tax and spending left at historic highs, on top of uncomfortably large levels of borrowing.

“The Government’s best hope is that its planning reforms unleash an unexpected tidal wave of growth and investment, but in its absence we are set for a painful, miserable few years – with a severe pinch point in the third year of the forecast, when the spending taps are turned off, spending discipline tightens significantly under the new fiscal rules, and income tax thresholds at last begin to rise again.”