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Alistair Darling revises budget deficit forecast

Alistair Darling has today revised his budget deficit forecast for the next four years from £606 billion to £611 billion which is an increase of £5 billion on his forecast in early 2009. Purely and simply this is because of a reduction in the size of the UK economy by 4.75% against initial Treasury forecasts of 3.75%. There are obviously implications regarding tax receipts which will impact upon the UK government finances, hence the extra £5 billion on borrowings.

The government has also reiterated the intention to halve the UK budget deficit in four years although even then it would still stand at around £85 billion a year. No matter how much gloss the UK government and Alistair Darling in particular attempt to put on the UK economy and the UK finances, they are in a dire situation. In many ways, this is the worst time for a possible Conservative victory in the next general election because of the poisoned chalice which the next government will inherit.

There is no quick fix for the UK economy, there is no sudden influx of tax to pay down growing debts and unfortunately unemployment will rise in the short term - the situation could get worse before it gets better!

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