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April 6, 2009    

UK public sector debt at record levels

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by Peter Charalambous

The latest figures from the Institute for Fiscal Studies (IFS) shows that the UK will need to raise an extra £39 billion a year for the next five years if the Government is going to balance the books by 2015.

This would mean that if the money was to be raised solely through an increase in taxation then the average household would end up paying an extra £1,250 of tax a year.

A number of think tanks have made calculations regarding public sector borrowing and the consensus is that by the end of 2010, borrowing will be above 10 percent of GDP.

The latest IFS report highlights that the Government has not included the bank losses from the International Monetary Fund, which are estimated at £130 billion.

Now it seems as though the UK’s debt has been mis-calculated, the problem now is that even during 2008-2009, borrowing was £17 billion more than expected and cut backs in public spending are seemingly the only way forward, according to the IFS.

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