Stock market falls will cost Treasury £2bn
Economists at PricewaterhouseCoopers are predicting that the collapse in the stock market since last autumn will hit tax receipts by as much as £2bn.
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According to PwC, the fall in share prices is likely to cost between £1.5bn and £2bn in lost stamp duty, capital gains tax and tax on banks’ and brokers’ profits.
The economists also said that factors that had helped prop up revenues in the past, including housing and oil prices might not be so helpful next year.
This is likely to mean Brown will have to borrow more than the forecasted £24bn as predicted by the chancellor in November in his pre-Budget report.
PwC puts this figure at closer to £30bn.