Chancellor Rishi Sunak ‘risks killing off Britain’s Covid recovery if he hikes taxes too quickly’

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RISHI Sunak risks killing off Britain’s Covid recovery if he raises taxes too fast, a think tank warns.

The Chancellor is also advised to extend bailout schemes in his Budget — but not for too long.

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Rishi Sunak risks killing off Britain’s Covid recovery if he raises taxes too fast, a think tank has warned

The silver-lining to the lockdowns is that Brits are sitting on £125billion in savings, the respected Institute for Fiscal Studies added.

And if families spend this cash, they will help the country claw out of recession.

The IFS said “sizeable tax rises” are looming as the Treasury has to beef up public spending to start balancing the books.

But they told Mr Sunak “substantial tax rises should not be part of the Budget”.

IFS’s Paul Johnson said: “He must strike a balance between continuing support for jobs and businesses, and weaning the economy off blanket support.

“Any significant continuation of the furlough scheme must be carefully targeted.”

The Treasury has underestimated how much cash it must plough into public services in the next few years, the IFS claimed.

The Chancellor is also advised to extend bailout schemes in his Budget — but not for too long

Mr Johnson added: “It is possible growth will be fast enough that big fiscal deficits will largely dissipate.

“But that is not a central expectation — more likely we are on track for ongoing unsustainable deficits.”

Mr Sunak is considering raising Corporation tax, scrapping the stamp duty holiday and ditching the freeze in fuel duty in his Budget due on March 3.

IFS’s Paul Johnson said: ‘He must strike a balance between continuing support for jobs and businesses, and weaning the economy off blanket support’

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