The government will have to find money to increase public sector pay or face consequences in its services, the Institute for Fiscal Studies (IFS) has warned.

Chancellor Jeremy Hunt outlined his spring budget on Wednesday, with promises of additional free childcare for working families and the scrapping of limits on pension pots to encourage people back to work.

However, despite his announcement taking place in front of a backdrop of mass strikes and a large protest outside Parliament, there was no mention of the ongoing pay disputes.

Politics live: Budget fallout continues as experts give their analysis

After analysing Mr Hunt’s plans, the economic thinktank said it “seems implausible that there won’t be extra money available” for public sector workers.

The IFS’ director, Paul Johnson, said: “You can’t keep cutting the pay of teachers, nurses and civil servants, both in real terms and relative to the private sector, without consequences for recruitment, retention, service delivery, morale and – as we have seen yesterday and today – strikes.

“Money will have to be found from somewhere.”

More on Budget 2023

Mr Johnson also said the ongoing government defence that inflation-matching pay rises are unaffordable did not stand up to scrutiny “on the fact that Mr Hunt found £20bn a year yesterday for other things”.

“This is of course, as all of this is, a question of choices and priorities,” he added.

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RMT union boss Mick Lynch said the new budget only benefited the rich.

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