£20bn needed to plug government’s fiscal gap: PwC

The British government will need to find another £20bn on top of estimated
revenue within four years to close the fiscal gap,
has warned.

The firm believes further tax rises or spending cuts will be needed to reign
in finances by 2014, based on a more “cautious view” of medium term growth than
the Treasury’s.

John Hawksworth, head of macroeconomics, PwC believes public sector net
borrowing will remain about 5% of GDP in 2014/15 compared with the Treasury
forecast of 4.4%.

“We assume the same 5% of GDP permanent loss of output due to the recession
as the Treasury, but assume that the underlying trend growth rate from 2008/9
onwards is 2.25% per annum, rather than the Treasury’s 2.75% central estimate
and what they describe as a ‘cautious’ assumption of 2.5% used in their own
public finance projections,” he said.

Read the full PwC statement:
says additional tax rises or spending cuts of around £20 billion needed by

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