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British Retail Consortium pleads for public sector spending cuts

The British Retail Consortium (BRC) has today reiterated its preference to public sector spending cuts rather than increased taxes in the next budget. This is a move which is certainly at odds with the current government although more in line with the Conservative party manifesto which has highlighted the need to reduce the ever growing budget deficit at the expense of public sector spending.

While many people will highlight the fact that the UK economy has officially left recession, the truth is that the recovery is still relatively fragile and still needs to be nurtured. If the government was to introduce significant tax increases in the short term there is a chance that this would take much-needed liquidity away from economy and businesses and ultimately delay a recovery in the UK economy. However, Gordon Brown has argued, quite rightly in the minds of many, that reducing public sector spending at this moment in time would place many businesses under more financial pressure and could in itself reduce the strength of the recovery and potentially tip the UK back into recession.

The truth is that there needs to be a balance between increased taxes, at least in the medium term, and a reduction in public sector spending. The budget deficit is forecast to be around £178 billion for the current tax year and is unlikely to fall significantly in the short term - unless severe action is taken immediately.

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