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Teaching activity

In the News Teaching Activity - Institute of Fiscal Studies on economic challenges facing the next government (Feb 2024)

Elizabeth Veal

1st February 2024

As the UK’s General Election gets ever closer, the IFS have published a report suggesting that the next government will face some of the toughest economic challenges ever.

According to the IFS, the UK's next government is going to face a daunting fiscal landscape with stagnant living standards, record taxes, and strained public services. Both major parties aim to cut debt, but high interest and slow growth pose unprecedented challenges to this goal. Slow economic growth and tight public finances mean choices will have to be made – should government spending on public services be increased or cut and what about taxes? Immigration reduction poses issues for social care and education funding. Progress toward net-zero is needed, but this could be tough because there are upfront costs, with many of the benefits somewhere in the future. Disability benefit costs have risen, but any cuts risk serious hardship. As the future government tries to tackle each economic problem, the IFS suggests that fiscal constraints will mean it has to prioritise. The IFS believes that the electorate deserves a new government that it realistic about the need to address these trade-offs.

Constraints and trade-offs for the next government | Institute for Fiscal Studies (

1 Explain how slower growth can make it harder to improve public finances.

2 Read the executive summary in the Report. Find as many challenging economic trade-offs the new government may face as you can. Explain why there is a trade-off carefully.

3 The IFS argues that ‘None of these challenges can be meaningfully confronted by a government that wilfully ignores reality and the need to choose between difficult options.’ What are the IFS hoping the different political parties will do in election year?

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Elizabeth Veal

Liz has taught Economics for over 25 years, including several years as Head of Economics at leading schools.

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