UK taxes set to increase by £20 billion a year
The Institute for Fiscal Studies has today issued a scathing report on the UK economy and government borrowing. The IFS believes that the UK government will need to increase taxes by at least £20 billion a year as they have "overestimate tax receipts for the future" - something which has the potential to blow a major hole in Gordon Brown's plans for the future.
As the PM has already indicated that public spending will not suffer in the short to medium term, this only leaves tax rises to fill the ever-growing hole in the UK budget. Even with a £20 billion a year tax rise the IFS forecast that they will not be until 2030 that the UK national debt will fall below 40% of gross domestic product, a figure which Gordon Brown set as a ceiling back in 1997. This is a difficult period for the UK economy and no matter how the government tries to wrap up and spin its way out of the situation it will take decades to repay the mounting debt used to try and refloat UK business and industries.
While the Conservative government may be favourites at the moment to win the next general election, they will inherit one of the worst balance sheets in UK history and need to increase taxes and reduce public spending to bring the situation back into line.
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