Debt Solution Help:Tax rises and spending cuts expected
Friday, 24. July 2009
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According to the Centre for Business and Economic Research (CEBR), a programme of cuts and tax rises totalling £100bn is required to repair the UK’s public finances.
Tax rises and public spending cuts are necessary to fund the economic recovery warns the CEBR, meaning that life under the next government could mean heavy taxing on a public already hit hard by the recession.
A budget deficit of almost £90bn was recorded in the UK in 2008/09.
The CEBR says that, in order to reduce the UK’s budget deficit to under £50bn by 2014/15, its proposed programme of cuts and tax is needed.
According to the CEBR’s think tank, if the Tories win the next election then the likely outcomes is £20bn in tax rises and £80bn in spending cuts.
And, should Labour win the election then the prediction is for £40bn more to be raised in tax and £60bn in spending cuts.
As unemployment grows, future public service cuts may not be a priority for the many people facing tough times during the recession. However, the likely outcome of tax hikes will mean a slow recovery out of debt for those affected by the recession.
The current economic situation means that many consumers are seeking debt help which will ensure they are in a far stronger position when the recovery begins to take hold. Debt management solutions are available to suit every budget.
Fiscal consolidation
CEBR chief executive Douglas McWilliams says: “It is likely that any government - particularly a new one - will be forced by political necessity to announce its fiscal consolidation programme early while it is still possible to blame the need for it on the previous government.”
The Treasury has estimated that the UK economy will contract by 3.5 per cent this year, whereas the CEBR expects the economy to shrink by 4.1 per cent. Although the CEBR did go on to predict economic growth of 0.6 per cent in 2010 rising to 0.9 per cent in 2011.
Mr McWilliams tempered the recovery prediction by saying that said the road out of recession will be “sluggish”, leading to reduced tax revenues.