Inflation reduces the value of spending. If prices rise but budgets stay the same, those budgets lose real-terms value. According to an Institute for Fiscal Studies analysis, this is the risk facing the UK’s public services.
Previous forecasts suggested the UK’s public services needed an extra £4bn to return departmental spending to real growth in 2022-23, but the latest ones suggest those departments now require £8.3bn to cover 2022-23 spending – more than double the initial projection. Worse, for 2023-24, almost £18bn is estimated to be needed to cover public service expenditure.
This extra spending would not allow for increased service provision: it would only maintain current standards. If existing budgets were maintained, in effect ignoring inflation, there would be real-terms cuts to the NHS, schools and other key areas.
[See also: How inflation is worse for women]
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