RISHI Sunak’s jumbo spending splurge will take the state back to its mid-1980s size before the big Thatcher sell-offs, it has emerged.
After pouring over the Budget’s numbers, the Institute for Fiscal Studies (IFS) found 41 per cent of national income will soon be from the government – a 35 year record.
The £175billion of extra spending that the Chancellor unveiled on Wednesday will also take its total outgoings to more than £1 trillion for the first time.
The eye-watering figures emerged as Mr Sunak admitted there are risks in his plan.
His borrowing spree could end in disaster if interest rates climb or growth collapses, he conceded.
But Mr Sunak said he would make “no apology” for borrowing to invest with interest rates at “a multi-decade low”.
The Chancellor said he had made a “judgement” on rates remaining low for some years.
Mr Sunak said: “You’re absolutely right, you have to make a judgment about the persistence of low interest rates.
“The reality is these interest rates have stayed lower for longer than anyone expected and keep falling, and it’s right that I as someone in charge of managing our public finances has a view on that.”
But experts also warned that the coronavirus outbreak could decimate his plans if it hits the economy hard, and Mr Sunak will be forced to rip up most of this Budget by the autumn.
IFS boss Paul Johnson said: “Only time will tell whether any of the numbers in this budget will have meaning once the economic effects of coronavirus become fully evident”.
The Independent Office of Budget Responsibility’s chairman Robert Chote added: “As long as it remains cheap for the government to borrow, their arithmetic remains OK. It looks more difficult if it doesn’t”.
