Government could raise taxes to cover £90bn borrowing rise

The state of the government’s finances are so perilous that it may have to borrow £90bn next year and raise taxes.

Analysis by the Centre for Economics and Business Research predicts that borrowing this year will be $63bn, well above the £43bn forecast by chancellor Alistair Darling, rising to £90bn in 2009-10. To cover the shortfall, income tax would have to rise by 5p in the pound.

Other research by Capital Economics predicts that Britain’s budget deficit, already the largest in the developed world, will rise to £100bn by 2010-11, according to The Telegraph.

Further reading

Government needs to raise income tax by 5%