Wednesday, 14 March 2018

Tax rises of £40bn 'needed by mid-2020s' to cut deficit

Taxes will need to rise by £40bn per year by the mid-2020s if the government wants to keep spending constant and balance its books, a think tank warns.

The Institute for Fiscal Studies added that dismal productivity, earnings and GDP growth had become the "new normal".

It comes after the chancellor unveiled upgraded growth and borrowing forecasts in the Spring Statement on Tuesday.

Philip Hammond said the UK economy had reached a turning point and there was "light at the end of the tunnel".

The chancellor told MPs growth was now forecast to be 1.5% in 2018, up from 1.4% forecast by the Office for Budget Responsibility in November.
Debt is also expected to fall as a share of GDP from 2018-19, the first drop in 17 years.

However, Paul Johnson, director of the Institute for Fiscal Studies (IFS), said that "nothing much" had changed on Tuesday.

He said the good news on borrowing would "largely wash out" over the next few years, while the structural deficit in 2019-20 would be almost unchanged.

He also said the UK's growth prospects were "among the worst in the G20".

BBC     News.