Ending austerity means increasing taxes or deficit, warns thinktank

Politicians must face up to the costs of public sector pay rises, reversing welfare cuts and boosting governance, says Resolution Foundation

Philip Hammond will have to rip up the government's deficit reduction plan or increase taxes for most of the population if he decides to end seven years of austerity by sanctioning higher public sector pay, reversing welfare cuts and providing extra cash for Whitehall departments, a thinktank has said.

The Resolution Foundation said it was possible for the chancellor to do a U-turn in his autumn budget, but only if he was prepared to increase borrowing by more than 100bn over the next four years or to make individuals and companies pay more tax.

Related: Boris Johnson: lift 1% ceiling on public sector pay increases

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