The cuts necessary to close the public deficit would mean reversing all public spending increases since 1997, an independent report has shown.

In its annual Green Budget launched today, think tank the Institute For Fiscal Studies (IFS) has warned that spending cuts or tax increases would need to be £13bn harsher over the next five years than the £57bn target savings announced in December’s pre-Budget report.

This would mean reverting to pre-1997 levels of departmental spending as a share of national income. It would undo all the spending increases undertaken by the Labour government since 1997.

However, the IFS report warned that slashing spending or raising taxes too quickly over the next year would put the economy at risk.

It calls on the government for “more ambition” in repairing the public finances, but says, “don’t squeeze too soon.”

The IFS researched the Green Budget alongside Barclays Bank, analysing the government’s 2009 pre-Budget report and its plans to reduce the deficit once the economy has started recovering.

News of the need for even deeper cuts comes as property managers are already looking to find efficiency savings under the Operational Efficiency Programme.

The hope is to find £1.5 billion of annual running cost efficiencies by 2013-14,  eventually rising to £5 billion a year over a ten year period.

To read the full report, click here: IFS Green Paper 2010

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