AUSTERITY is on the way back, independent experts warned today following Chancellor Jeremy Hunt’s Autumn Statement.

Mr Hunt’s handouts to business and attempt to win votes by cutting National Insurance contributions will be financed by a renewed squeeze on public services, the Institute for Fiscal Studies (IFS) spelt out.

Institute director Paul Johnson said the “substantial tax cuts” in the Chancellor’s statement were being “paid for by planned real cuts in public service spending.”

He added that the Chancellor was, “by the narrowest of tiny margins, still on course to meet his — poorly designed — fiscal rule that debt as a fraction of national income should be falling in the last year of the forecast period.”

That is on the basis of “a series of questionable, if not plain implausible, assumptions,” including “that many aspects of day-to-day public service spending will be cut,” Mr Johnson said.

“It assumes a substantial real cut in public investment spending,” he continued.

“He has spent up front and told us he will meet his targets largely by unspecified fiscal restraint at some point in the future.

“What he will do in March if the Office for Budget Responsibility downgrades its forecasts we do not know.

“He or his successor is going to have the mother and father of a headache when it comes to making the tough decisions implied by this statement in a year or two’s time.”

The IFS also confirmed today that the richest would benefit the most from Mr Hunt’s measures and that the individual tax cuts only return to taxpayers a quarter of the extra money they are paying in increases since 2021.

Labour MP Jon Trickett commented: “The Chancellor wants his budget to be remembered as a great Christmas giveaway. 

“But the truth is that, rather than being seen as a Tory Santa Claus, he will actually be seen as a ‘mad axeman’ once the cuts begin to bite.”

The Chancellor’s statement sparked speculation that the government may call a general election next May, giving time for the National Insurance reductions to be felt in voters’ pockets but before fresh public spending cuts have an impact.

This would then put pressure on Labour, since shadow chancellor Rachel Reeves has refrained from pledging to reverse any of Mr Hunt’s proposals, including his tax cuts for business and his attacks on welfare benefits.