Its Green Budget 2017, produced in association with ICAEW and funded by the Nuffield Foundation with analysis from Oxford Economics, is published today. The think tank’s analysis suggests £17bn of tax rises are planned over this parliament relative to 2015–16. Tax (and non-tax) receipts are expected to rise above 37% of national income for the first time since 1986–87.

The IFS says the chancellor, Philip Hammond, has not set himself any fiscal targets that can be missed during the current parliament. But it claims meeting his target of eliminating the deficit during the next parliament will probably mean an additional consolidation of up to £34bn, extending the period of spending cuts and tax rises well in to the 2020s.

Hammond remains committed to his predecessor’s plans for cutting day-to-day public service spending, which is due to fall by 4% in real terms over the next three years, having fallen very little over the last three years. The IFS says a particularly sharp cut is planned for 2019–20, immediately prior to the next general election.

The think tank calculates that after nearly seven years of tax rises and spending cuts, the deficit this year will be higher than in all but 13 of the 60 years before 2008, and remains the fourth highest of 28 advanced economies. In addition, the national debt is at its highest level as a fraction of national income since 1965–66 and is higher than that faced by all but five other advanced economies.

Real spending on public services has fallen by 10% since 2009–10, which the IFS says is by far the longest and biggest fall in public service spending on record.

Oxford Economics forecast that UK GDP growth will be 1.6% in 2017 and just 1.3% in 2018. The weaker outlook is largely driven by higher inflation, the bulk of which results from the recent sterling depreciation. Though prospects for wages are a little brighter, real earnings could rise by just 0.2% in 2017 compared with 1.7% in 2016. The research consultancy also estimates the UK economy could end up around 3% smaller in 2030 than it would have been if the UK had voted to remain in the EU.

Paul Johnson, IFS director and an editor of the Green Budget, said: ‘For all the focus on Brexit the public finances in the next few years look set to be defined by the spending cuts announced by George Osborne. Cuts to day-to-day public service spending are due to accelerate while the tax burden continues to rise. Even so the new chancellor may not find it all that easy to meet his target of eliminating the budget deficit in the next parliament. Even on central forecasts that is going to require extending austerity towards the mid-2020s. If the economy does less well than hoped then we may see yet another set of fiscal rules consigned to the dustbin.’

The IFS Green Budget is here.