Andy Burnham is facing a £24billion real-terms spending squeeze as inflation bites, a leading think-tank has warned. It means the Prime Minister and Chancellor John Healey will face ‘very difficult trade-offs’ in the autumn Budget, the National Institute of Economic and Social Research (NIESR) said. It will remain ‘higher and more persistent’ than previously thought, not returning to its 2 per cent target until 2029, NIESR predicts. The higher outlook for inflation will erode the real-terms impact of public spending increases, creating a £24billion shortfall by the end of the decade compared with forecasts made at the Spring Statement earlier this year. The think-tank warned that with little room to borrow more without adding to already-high debt levels, these commitments would have to be funded by tax hikes or spending cuts elsewhere.