£10bn tax hike predicted

30 November -0001

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Gordon Brown may have to raise taves by as much as £10 billion per year over the next four years, it's predicted by the National Institute of Economic and Social Research

The government set out it plans for tax and spending assuming the economy would grow by three to three and a half per cent in the last Budget, but new data suggests actual growth could be well below this at around two per cent.

NIESR points to weak consumer spending and stabilising increases in income, as affecting Treasury revenues. As people buy less on the high street, the government's revenues from VAT drop.

This could see a £40 billion shortfall in the government's income predictions between 2005 and 2009, the think tank finds.

However, the rises in tax are not expected to come immediately.

This is because while the economy weakens, a tax hike could push the UK into recession, but Mr Barrell expects the chancellor to act to raise taxes when the economy is stronger.

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