Brexit: George Osborne warns of tax hikes and spending cuts
Chancellor warns the country needs to "live within its means". So which areas might he target?
Households need to brace themselves for painful tax hikes and yet more austerity measures as a result of Brexit, George Osborne warned today.
Speaking on BBC Radio, the chancellor said the UK is “going to be poorer” as a result of our decision to leave the European Union.
"We are… going to have to show the country and the world that the Government can live within its means," Osborne said, adding this would “absolutely” mean spending cuts and tax hikes.
The chancellor would not elaborate exactly which areas might be targeted, as he said this was a decision for the new Prime Minister to make.
David Cameron announced last week that he was stepping down as a result of a leave victory in the referendum, with a new leader likely to be in place by September.
I won't be a candidate to succeed David Cameron - but will fulfil my duty to my country and help new PM unite party https://t.co/tX9H68XMxy
— George Osborne (@George_Osborne) 28 June 2016
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Where might the axe fall?
Although we can’t say for sure which taxes might be hiked or where spending could be slashed, the chancellor did make a number of predictions in the build up to the referendum as to what might happen if we voted to leave.
Speaking two weeks ago, he claimed that the Government would need to fill a £30 billion black hole in public finances.
To achieve this, the basic rate of income tax might need to be hiked by 2% to 22% and the higher rate by 3% to 43%. There could also be a 5% rise in the inheritance tax to 45%.
Duties on fuel, alcohol and cigarettes could also increase by up to 5%, he warned.
These hikes would help raise an additional £15 billion, with the other half of the £30 billion black hole filled by spending cuts.
Health, defence, education, policing, transport and local Government budgets would all have to be reduced to achieve this, Osborne said at the time.
Only time will tell whether any of these measures are introduced, but we're likely to have to wait a while to find out: Osborne has ruled out any emergency budget until the new prime minister is in place this autumn.
Read more about the Brexit saga on loveMONEY:
What you should and shouldn't do with your money now we've voted to leave
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