E&Y warns on tax rises

The state of UK public finances could force Gordon Brown to raise taxes,
according to the Ernst & Young ITEM club’s latest forecast, which will be
published tomorrow.

The report will say that due to rising energy bills, the economy is growing
at modest growth and interest rates did not need to keep inflation under

Peter Spencer, ITEM’s chief economic adviser, said the second half of the
year would not nearly be as strong as the first half.

‘The rise in energy prices, by squeezing incomes, will end up being
disinflationary, as it will in America. That is why the Bank will not need to
raise rates,’ he explained.

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