UK Set for Decades of Tax Increases

Posted on by Watson Buckle Accountants in Bradford

The Organisation for Economic Cooperation and Development (OECD) have forecast that the UK faces decades of tax increases and spending cuts, if it wants to bring the national debt under control.

A recent study carried out by the OECD, whose findings were published yesterday, highlighted that the Coalition’s current austerity programme will not be enough to bring the current debt down to “prudent” levels – and instead recommended an additional and “sustained period of fiscal tightening.”

Currently, despite the five-year programme of tax increases and spending cuts which have been put in place by the government, Britain’s national debt is estimated to rise from seventy-two percent of gross domestic product (GDP) to seventy-six percent by 2014/2015; whilst it is also estimated that the national debt will peak at £1.5 trillion during 2016/2017.

The French-based organisation, along with suggesting the UK is set for decades of tax increases, warned that the recent financial crisis and economic downturn will be relatively minor on the economy, compared to the ageing population; with the report suggesting: “spending pressures, principally from health and long-term care, will continue to mount.”

As a result of the study, the OECD has suggested that the UK, along with other developed countries, has a long-term goal of bringing debt down to fifty-percent of GDP. If the UK is to hit such a target, it will need austerity measures to equal about eight percent of the economy – roughly £126 billion.

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