How will the government push through tax increases?
As the UK economy continues to fall and unemployment continues to rise we seem to be approaching a nightmare scenario where the government will need to increase tax rates to replenish the UK budget. While the authorities are at pains to avoid the subject of tax increases there is no doubt that substantial rises will be needed in the medium term to address what is a sickeningly high UK national debt. Experts suggest this debt will top £1 trillion and could be as high as £3 trillion if the recently announced insurance based rescue package fails.
It is a frightening thought to think that we could soon be talking in trillions of pounds rather than billions of pounds as the UK economy continues to fall and activity stagnates at best. While the figures in the US are significantly higher than those being mentioned in the UK we must not lose sight of the fact that the US economy is substantially larger than the UK. Even the IMF has entered the equation suggesting that the UK economy is one of the weakest in the developed world and could seriously lag any recovery in the worldwide economy.
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