Chancellor will have to lift taxes by £240 per household to eliminate accounts shortfall, economists warn
Accountancy Age, 11 Mar 2008
Chancellor Alistair Darling is under pressure to admit the slowing UK economy has left a multi-billion-pound shortfall in his accounts at the equivalent of £240 per household, prompting a hike in taxes or more borrowings.
Economists expect Darling to borrow as much as £42bn in 2008/09 as a slowing economy eats into government revenues – a £6bn increase on HM Treasury's previous plans for the year, The Daily Telegraph reports.
Accounting firm Grant Thornton said the cost is equal to £240 for every household. ‘There is a consensus among economic commentators that there is a black hole of unsustainable borrowing and it is this hole that will have to be filled with tax rises eventually,’ Maurice Fitzpatrick, an economist at the firm, said.
Grant Thornton's forecasts of a £6bn 'overshoot' in borrowing are in line with City economists' predictions, which indicate additional borrowings from £4bn to £6bn over the coming year, followed by more rises in the two following years.
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