Taxes to reach highest level for 30 years, according to thinktank IFS

UK taxes will reach a 30-year high and austerity measures are likely to continue into the next decade, according to a new report from thinktank the Institute of Fiscal Studies.

Ahead of Chancellor Philip Hammond's annual budget report in March, the IFS released its "Green Budget" for 2017, which also projects the government will continue with austerity cuts in the coming years.

The Conservative government had previously said that income tax, national insurance and VAT would not rise, but the report suggests the average percentage of income being taxed will reach 37% by 2020.

The IFS pointed out that adjusted for inflation, public spending will be 13% lower than its levels in 2010-11 by the same time in 2019-20, affecting services such as the justice department, culture and the environment.

"For all the focus on Brexit the public finances in the next few years look set to be defined by the spending cuts announced by George Osborne," said IFS director Paul Johnson.

"Cuts to day-to-day public service spending are due to accelerate while the tax burden continues to rise. Even so the new chancellor may not find it all that easy to meet his target of eliminating the budget deficit in the next Parliament."

According to forecasts from the research, the UK economy may end up being 3% smaller than what it would have been if Britain voted to stay in the European Union.

The Treasury released a statement on Tuesday in which it said it was "determined to deliver efficient public services".

"The government is committed to repairing the public finances and living within our means so that we can build an economy that works for all," the statement added.

Hammond will reveal the Treasury's budget plans on Wednesday 8 March, the first since UK citizens voted to leave the EU in June last year.