Paul Johnson CBE is perhaps the most familiar face in UK economics. The former IFS Director, and now Provost of Queen’s College, Oxford, opens this month’s ICAS Annual Conference. On the cusp of the eagerly awaited UK Budget, he talks to CA magazine about growth, tax and spend, and how we dig ourselves out of a hole

“The UK’s most influential beancounter,” according to the Guardian, Paul Johnson is regarded as one of the UK’s leading authorities on tax and spending policy, having spent 14 years heading the Institute for Fiscal Studies (IFS) until he joined Queen’s College, Oxford earlier this year. 

During his tenure at the economics think-tank, Johnson became one of the most influential people in Westminster, famous for his assessments of the UK’s public finances, often expressed in short interviews on TV news or through his column in The Times.

While the IFS was strictly non-partisan, he criticised Brexit, arguing it would have negative financial ramifications, and has pointed out that the UK’s ageing population and high borrowing levels are likely to make the country poorer. Last year, he warned that Labour and the Conservatives were joined in a “conspiracy of silence” over the “staggeringly hard choices” future governments would need to take on tax and spending. Former Chancellor Jeremy Hunt recently said, “Paul was often the swing vote as to whether a budget unravelled. You never really relax until after the IFS verdict.” 

Johnson had worked at the Treasury as Director of Public Services and Chief Micro-Economist from 2004 to 2007. A previous civil service role saw him work as Chief Economist at the Department of Education, while his CV also includes two years working at the Financial Services Authority. 

The economist also has a habit of returning to former haunts. He graduated from Oxford, where he now works, with the same PPE (politics, philosophy and economics) degree as many of the leading politicians he would go on to critique. His first post-university job was at the IFS in 1988, where he spent the next decade. He’s also currently an adviser to Frontier Economics, the consultancy where he was Senior Associate from 2007 to 2010.

Johnson has also written Sunday Times bestseller Follow the Money, which garnered rave reviews when published in 2023.

This month Johnson is opening speaker at the ICAS Annual Conference, where he will talk to Dharshini David about the issues affecting the UK economy. With the forthcoming Budget widely tipped to be particularly tough, there’s no better time for accountants and the wider business world to hear his views on the prospects for UK plc.

The best-laid plans: What might the Budget bring

With the UK government facing a gap of tens of billions of pounds, metrics around growth, inflation and interest offering little comfort, and people’s alienation from mainstream politics at an all-time high, what can be done to restore the general sense of economic wellbeing that’s been absent since, perhaps, the 2008 crash?

 “I’d like to see some kind of clear vision and strategy for where we’re going on tax and spending,” says Johnson. “In terms of specifics, some deferred tax rises and a real effort to get a grip on some elements of spending. I think Reeves should probably break her manifesto commitments [not to raise income tax, VAT or employee national insurance].”

UK GDP grew by just 0.3% in Q2 2025 following 0.7% growth in Q1. Unemployment reached its highest level since mid-2021 – rising to 4.7% –  in the three months to July. Inflation, in defiance of a target of 2%, was running at 3.8% in the 12 months to August 2025. While the IMF projects UK inflation to be the highest of the G7 countries next year, it also forecasts our growth will be the second highest, behind only the US, albeit with a far from soaraway 1.3% year-on-year increase.

As a share of GDP, government presence in the UK economy, two-and-a-half years after the end of the public health emergency, remains higher than it was pre-Covid. So how can government reduce the size of the state without serious disruption to growth, public services and social stability?

“If you’re serious about cutting spending, you have to come up with radical solutions,” says Johnson. “What that could mean is people pay the first £5,000 pounds of their NHS treatment. Or extend higher education loans to 64. It means being really hard on people on benefits, getting away from the triple lock and raising the state pension only in line with prices.” All of which is politically risky, to put it mildly.

So what other options are there? In crude terms, the dilemma Rachel Reeves faces is binary. Broad-based tax increases versus bringing money to the country’s coffers via smaller, incremental, tactically spread tax increases. The former option – which Johnson favours – has the considerable benefit of addressing much of the fiscal deficit in one fell swoop, but entails the perilous reputational damage of breaking a manifesto pledge.

The second option spreads, and targets, the extra burden – but is confoundingly complex and draws its own protests from specific sectors.

But one or the other seems inevitable, Johnson believes: “Borrowing even more is probably the least plausible of all, given where we are. In the long run, we only get out of this conundrum by really getting growth going.”

Magic bullets: The search for overarching solutions

Is there one key structural reform that the government could implement that might change the trajectory of growth? Or is a mosaic of incremental reforms required? “In the end, it has to be lots of things,” says Johnson. “Getting the planning system right is clearly important, likewise the energy system so we don’t have incredibly expensive energy; getting the technical vocational education system right is clearly important, supporting finance into research and development and innovation… all of these things matter. Part of the problem is we’ve ended up with this big superstructure of regulations and tax, which no one ever really intended but is really hard to unpick.”

Outside edge: External challenges

Conflicts such as the Russo-Ukrainian war, the fragility of the situation in the Middle East, trade frictions, global economic stagnation, currency fluctuations – just a handful of the external factors that can impact Britain’s economic outlook beyond the Budget. “One problem, clearly, is the uncertainty around tariffs,” says Johnson. “And not just tariffs on us, but on worldwide trade. We just don’t know how that’s going to settle down.

“Then there are potentially catastrophic things, like China being more aggressive with Taiwan, and so on. And there is at least a risk that we’ll have a big stock market correction, because it’s gone up vast amounts over the last year or two. So there are plenty of reasons to be concerned.”

Weathering the storm: Advice for UK business

What can British businesses do to stay the course? Examining how companies have thrived in the past during times of turbulence, Johnson has a simple – but very difficult – solution.

“In the end, the answer is, innovation, innovation, innovation, isn’t it? That’s not a terribly helpful answer, but throughout history businesses have thrived and grown out of the problems they face. But the danger for businesses is they end up in the same place as hospitals – being so focused on keeping their heads above water they don’t have time to do the long-term innovation required.”

Ultimately, though, he believes battle-weary business leaders have plenty to feel optimistic about, and should set their goals beyond mere survival, towards strategic plans for organic growth.

“Whisper it quietly,” he says, “but we in the developed world are still richer than we’ve ever been, as well as living longer than we’ve ever lived. Global poverty is at its lowest level ever.”

With so much to discuss, the conference promises an enthralling oversight of the year ahead. And yet, despite the challenges, attendees will, we anticipate, come away with a sense of optimism: that our current state of flux is merely temporary, and that clear vision and strategy can always conquer decline.

Find full details of the ICAS Annual Conference 2025 and book your ticket