The Treasury would need to top up spending by more than £8 billion this year and more thereafter to compensate for the squeeze on public services dealt by sky-high inflation, experts have warned.
As public service budgets are set in cash terms – and therefore do not enjoy an automatic boost from higher prices, unlike tax revenues – the Government’s spending plans are now “considerably less generous” than originally intended last autumn, according to the Institute for Fiscal Studies (IFS).
