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Is there an alternative to UK public sector cuts?

As the threat of a downgrade of the UK's credit rating hits the headlines many people are wondering exactly how the UK economy and budget deficit should be tackled. Unfortunately there is very little in way of leeway for the next government to borrow any money to refloat the economy and ultimately it will be funding taken from the public sector which will allow an incoming government to reduce the budget deficit. But could we see a tax increase?

The truth is that a tax rise would take some of the pressure off the next UK government but ultimately with such a fragile economic recovery at the moment there is very little chance of taking significant funding out of the system. In many ways, between the Labour Party, the Conservative party and the Liberal Democrat party, it all comes down to a matter of timing with regards to public sector investment cuts.

There is also the subject of national insurance tax which would be increased under a Labour government with the Conservatives looking to reduce the planned tax hike. As ever, the Liberal Democrats are somewhere in between the Labour party and the Conservative party but most definitely to the left of the political spectrum.

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