CEBR calls for major tax hikes and spending cuts

The influential think tank, the Centre for Business and Economic Research (CEBR), has warned that drastic measures are needed to get the UK’s budget deficit down to £50 billion by 2014/15.

The UK recorded a record budget deficit of nearly £90 billion in 2008/09.

The think tank suggested that the deficit could exceed the £150 million mark by 2014/15 if tax rises and spending cuts are not introduced.

According to the CEBR, if the Conservative party wins the next general election then the deficit will be plugged with £20 billion in tax rises and £80 billion in spending cuts, however if Labour retains power, then £40 billion in tax rises and £60 billion in spending cuts are predicted.

Douglas McWilliams, CEBR chief executive, said: “It is likely that any Government - particularly a new one - will be forced by political necessity to announce its fiscal consolidation programme early while it is still possible to blame the need for it on the previous Government. And it will look to achieve most of its results within a parliament.”

Meanwhile, the CEBR is forecasting that the UK economy will shrink by 4.1% this year with growth of 0.6% next year and 0.9% in 2011.

The forecast differs to the one from the Treasury who recently predicted that the UK economy will contract by 3.5%.

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