Austerity could make a comeback if the Government is unable to fund its spending increases through tax rises or more borrowing, according to the ‘Green Budget' published today by the Institute for Fiscal Studies.

The IFS says the Chancellor's extra £13.4bn announced in last month's Spending Round for public services in 2020/21, a rise of 4.4%, means borrowing is set to be over £50bn next year or 2.3% of GDP, breaching the government's own fiscal target. It is also double what the Office for Budget Responsibility forecast last March. As a result Government spending is set to match the pledges made by Labour in its 2017 manifesto.