Families could face tax rises of £1,250 a year to plug a catastrophic black hole in the public finances, the country's most respected economic forecaster warned yesterday.
The Institute for Fiscal Studies predicted that Government debt, already over the previous target of 40 per cent of national income, could reach 80 or 90 per cent by 2016 - similar to the level of Italy's 'basket case' economy.
The forecast came amid a separate warning that unemployment will peak at 3.2million in the second half of next year - meaning Gordon Brown will have to fight an election with voters still losing their jobs.
The British Chambers of Commerce said the recession would last until the end of the year, with the economy shrinking by more than three per cent - its worst performance since the war.
Experts at Pricewaterhouse Coopers were yesterday reported to be predicting tax rises of £800 per taxpayer to plug the hole in the nation's finances.
The £1,250 figure from the Institute for Fiscal Studies is based on a more pessimistic appraisal of the UK economy. It issued a worse-than-expected assessment of the impact of the recession, bank bailouts and increases to Government borrowing.
The IFS was ambivalent on the issue of whether the Government could mount another round of debt-funded tax cuts or spending increases.
'Any plausible additional stimulus would be likely to pale into insignificance relative to the underlying weakening of the public finances,' it added.
'Conversely, one could argue that, because debt is going to be much higher than previously expected, it has become more dangerous to add to it - even relatively modestly.'
In the grimmest possible backdrop for Chancellor Alistair Darling's Budget later this month, the IFS said the Government may have to find an extra £39billion a year by 2016 to bring borrowing under control. It said that amounted to £1,250 in higher taxes per family.
Alternatively, a five-year real terms spending freeze would have to be implemented across the public finances.
An extraordinary assessment by the Royal Bank of Scotland, now 70 per cent owned by the taxpayer, warned that something was 'rotten about the state of the public finances'.
A briefing note from the bank said: 'Fiscal policy management has been poor, with policymakers seemingly lulled into complacently assuming revenues would continue to pour in.'
It said that it could take the best part of a decade to repair the damage and get the public finances back into balance.
Treasury officials are working on plans for tax rises and spending reductions as they battle to demonstrate a credible-exit path' for the public finances. That is seen as vital to reassure international financial markets about Britain's capacity to repay the record levels of debt.
An increase in VAT, reduced temporarily to 15 per cent, to as high as 20 per cent after the next election has been considweek'sered by the Treasury. The IFS forecast of a £39billion black hole in the public finances is almost twice as bad as that predicted by Mr Darling in his Pre Budget Report last November.
The Prime Minister told finance chiefs last night that reforming the economy was an 'urgent priority' following last G20 summit in London. Mr Brown, Mr Darling, Bank of England governor Mervyn King and Financial Services Authority chairman Lord Turner met in Downing Street to discuss the next steps.
They agreed to step up progress on directing support to sectors most affected by the global downturn, such as the car industry.
Last night it emerged that Mr Brown has failed to capitalise on the success of the G20 summit with the electorate.
A YouGov poll for The Times found that the Tory lead over Labour has widened to 13 points - killing off any prospect of an early election.
Labour is unchanged from last month on 30 points, while the Tories are up one at 43 and the LibDems down one at 18.
Osborne's public sector squeeze
George Osborne has infuriated public sector unions with his suggestion that plans for inflation-busting wage rises needed to be reconsidered.
The Shadow Chancellor said the three-year salary deal for nurses, teachers and police might have to be unpicked to reflect the fact inflation is now zero.
Downing Street immediately rejected such an idea, insisting the deal offered 'stability' to millions of public sector workers.
Under an agreement struck by Gordon Brown last year, most public sector workers are getting two per cent a year increases in their salaries until 2010-11.
Mr Osborne warned that urgent measures were needed to make the country live within its means.
He argued the Government's plans to limit spending growth to 1.1 per cent sounded strict but were 'not tight enough given the fiscal situation we have to face'.
Asked how he would restore the public finances if he were Chancellor, Mr Osborne said 'the bulk of the strain needs to be borne is on spending restraint'. He added there was a need to 'look at' the three-year public sector pay deals because 'they may be very inflexible at a time when the economic conditions are changing very quickly'.
Karen Jennings, head of health at Unison, said Mr Osborne's words were 'a disgrace'.
She said: 'Health workers will be outraged at George Osborne's suggestion that they have enjoyed an "age of excess".'
But Liberal Democrat Treasury spokesman Vince Cable said his party would also aim for public spending restraint. continues here
The Institute for Fiscal Studies predicted that Government debt, already over the previous target of 40 per cent of national income, could reach 80 or 90 per cent by 2016 - similar to the level of Italy's 'basket case' economy.
The forecast came amid a separate warning that unemployment will peak at 3.2million in the second half of next year - meaning Gordon Brown will have to fight an election with voters still losing their jobs.
The British Chambers of Commerce said the recession would last until the end of the year, with the economy shrinking by more than three per cent - its worst performance since the war.
Experts at Pricewaterhouse Coopers were yesterday reported to be predicting tax rises of £800 per taxpayer to plug the hole in the nation's finances.
The £1,250 figure from the Institute for Fiscal Studies is based on a more pessimistic appraisal of the UK economy. It issued a worse-than-expected assessment of the impact of the recession, bank bailouts and increases to Government borrowing.
The IFS was ambivalent on the issue of whether the Government could mount another round of debt-funded tax cuts or spending increases.
'Any plausible additional stimulus would be likely to pale into insignificance relative to the underlying weakening of the public finances,' it added.
'Conversely, one could argue that, because debt is going to be much higher than previously expected, it has become more dangerous to add to it - even relatively modestly.'
In the grimmest possible backdrop for Chancellor Alistair Darling's Budget later this month, the IFS said the Government may have to find an extra £39billion a year by 2016 to bring borrowing under control. It said that amounted to £1,250 in higher taxes per family.
Alternatively, a five-year real terms spending freeze would have to be implemented across the public finances.
An extraordinary assessment by the Royal Bank of Scotland, now 70 per cent owned by the taxpayer, warned that something was 'rotten about the state of the public finances'.
A briefing note from the bank said: 'Fiscal policy management has been poor, with policymakers seemingly lulled into complacently assuming revenues would continue to pour in.'
It said that it could take the best part of a decade to repair the damage and get the public finances back into balance.
Treasury officials are working on plans for tax rises and spending reductions as they battle to demonstrate a credible-exit path' for the public finances. That is seen as vital to reassure international financial markets about Britain's capacity to repay the record levels of debt.
An increase in VAT, reduced temporarily to 15 per cent, to as high as 20 per cent after the next election has been considweek'sered by the Treasury. The IFS forecast of a £39billion black hole in the public finances is almost twice as bad as that predicted by Mr Darling in his Pre Budget Report last November.
The Prime Minister told finance chiefs last night that reforming the economy was an 'urgent priority' following last G20 summit in London. Mr Brown, Mr Darling, Bank of England governor Mervyn King and Financial Services Authority chairman Lord Turner met in Downing Street to discuss the next steps.
They agreed to step up progress on directing support to sectors most affected by the global downturn, such as the car industry.
Last night it emerged that Mr Brown has failed to capitalise on the success of the G20 summit with the electorate.
A YouGov poll for The Times found that the Tory lead over Labour has widened to 13 points - killing off any prospect of an early election.
Labour is unchanged from last month on 30 points, while the Tories are up one at 43 and the LibDems down one at 18.
Osborne's public sector squeeze
George Osborne has infuriated public sector unions with his suggestion that plans for inflation-busting wage rises needed to be reconsidered.
The Shadow Chancellor said the three-year salary deal for nurses, teachers and police might have to be unpicked to reflect the fact inflation is now zero.
Downing Street immediately rejected such an idea, insisting the deal offered 'stability' to millions of public sector workers.
Under an agreement struck by Gordon Brown last year, most public sector workers are getting two per cent a year increases in their salaries until 2010-11.
Mr Osborne warned that urgent measures were needed to make the country live within its means.
He argued the Government's plans to limit spending growth to 1.1 per cent sounded strict but were 'not tight enough given the fiscal situation we have to face'.
Asked how he would restore the public finances if he were Chancellor, Mr Osborne said 'the bulk of the strain needs to be borne is on spending restraint'. He added there was a need to 'look at' the three-year public sector pay deals because 'they may be very inflexible at a time when the economic conditions are changing very quickly'.
Karen Jennings, head of health at Unison, said Mr Osborne's words were 'a disgrace'.
She said: 'Health workers will be outraged at George Osborne's suggestion that they have enjoyed an "age of excess".'
But Liberal Democrat Treasury spokesman Vince Cable said his party would also aim for public spending restraint. continues here
![Churchill, Hitler and the Unnecessary War](http://patbuchananbooks.com/wp-content/uploads/bk-pjb-chuw165.jpg "Churchill_Hitler_the_Unnecessary_War\")
Post a comment on AAWR
0 Responses to "Families 'to face extra £1,250 tax a year each' as Darling seeks the £39bn he needs to get Britain's public finances back on track"Post a Comment
We welcome contributions from all sides of the debate, at AAWR comment is free, AAWR may edit and/or delete your comments if abusive, threatening, illegal or libellous according to our understanding of, no emails will be published. Your comments may be published on other nationalist media sites worldwide.