Are Treasury economic forecasts already out of date?
The suggestion that Gordon Brown will need to increase National Insurance by 0.5% from 2011 has caused a serious backlash from many in the Labour Party. However, tonight there are serious concerns that the proposed increase in National Insurance is based upon Treasury economic forecasts which are already well out of date. Just a few short months ago the Treasury had been forecasting an uplifting in the UK economy from the end of 2009 onwards but many economists believe this is not attainable. So what if the Treasury economic forecasts are incorrect?
If Treasury forecasts turn out to be fatally flawed there is a serious danger of public spending coming under serious pressure as the UK government would need to find substantial savings if tax receipts were less than expected. This would appear to be in direct contrast to Gordon Brown's recent announcements and his criticism of opposition parties who have pleaded for a reduction in the ever-growing public service spending budget.
If Treasury forecasts turn out to be only 12 months out of date this will have a significant impact upon the UK economy in 2011 onwards and see more and more UK taxpayers come under serious financial pressure. At this moment in time it looks as though the forecasts are overgenerous but such is the uncertainty in the UK at the moment that nobody quite knows when and how the economy will turn.
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