Credit crunch plunges UK £16bn deeper in debt

The impact of the credit crunch on UK’s tax revenues is threatening to plunge
UK’s coffers £16bn
deeper into the red over the next two years than Chancellor Alistair Darling has

Calculations for The Times newspaper by the
National Institute of Economic
and Social Research
reveal the toll on tax receipts will aggravate the
‘acute financial headache’ already facing Alistair Darling.

As the general election approaches the chancellor finds himself already
hampered by the country’s deepening slide into the red, leaving him with little
room to move for pre-election sweeteners or extra tax and spending measures.

The institute estimates the extreme economic and financial impact from the
credit crunch will force the chancellor to borrow an additional £8bn in the
current financial year and £8bn more in 2009-10. The £16bn deficit will add
almost 4p to the basic income tax rate.

Further reading:

WPP considered leaving UK over tax

Tax policy: leave it to the experts

The Times story

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