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IFS concerned about the UK public deficit

The Institute for Fiscal Studies (IFS) has issued a stark warning to the UK government suggesting that the "next two parliaments will involve significant pain for the UK". It is estimated that the average UK family will be £2,400 a year worse off by 2017/18 with the UK government being forced to claw back tens of billions of pounds with tax rises and public sector spending cuts. The fact this warning comes literally hours after Alistair Darling issued his pre-budget report gives what many believe to be the true gloss on the UK economy.

There are also concerns that the UK government has been overly optimistic regarding the expected pay down of government debt over the next 25 years. While the debt situation in the UK is bad enough on its own, there are concerns about the growing pressure on the UK government budget from an ageing population in the UK. In what is becoming a classic pincer movement, the UK government is being squeezed from both sides with reduced income in the short term and an expected increase in investment and social security payouts in the medium to longer term.

Even though the UK has one of the toughest tax regimes, with relatively high direct and indirect taxes, in the world, there are concerns this will get worse before it gets better and many of the "wealthy" in the UK may begin to look elsewhere for their long-term home.

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