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NHS funding crisis could deepen austerity

An NHS funding crisis and Britain's burgeoning population could make George Osborne's austerity plans even tougher after the election, an influential think-tank has warned.

The Institute for Fiscal Studies (IFS) said the Chancellor faced a "huge challenge" in order to meet his goal of returning the nation's finances to surplus by 2018-19. Just 40% of the planned cuts will have been delivered by the end of this year - with the remaining 60% needing to be pushed through amid massive pressures on key services.

In an indication of the uncertainty surrounding the economy, the report also suggested the coalition could have made the situation worse with the speed and depth of its austerity programme.

The fiscal tightening over this Parliament is believed to have trimmed 4% off growth: 1% per year.

Andrew Goodwin of Oxford Economics, which worked with the IFS on the report, said: "Oxford Economics analysis suggests that the economy has a significantly larger amount of spare capacity than the OBR estimates which, in turn, suggests that the medicine of austerity could end up being applied in a dose higher than the patient actually needs," Mr Goodwin said.

"We certainly think they are being asked to tighten too much. We think the repair job is not as large as they think it is."

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