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News - 10 October 2003
|What's the difference between £40bn and £20bn|
Gordon Brown’s speech at the Labour Party Conference promised that spending commitments up to 2005/06 will be honoured and expenditure after that date will be increased via improved efficiency and reduced bureaucracy. At a time of increasing economic weakness it might well be that this is a promise that he regrets making.
Figures released this week show that the government borrowed the second highest sum on record (over £15bn) in the first quarter of this year and although the Treasury predicts full year borrowing to be no more than £27bn, independent forecasters suggest that it will be closer to £32bn. Furthermore Gordon Brown predicts a narrowing of the deficit to £20bn in 2005/06 but at least one senior economist has predicted it widening to £40bn.
All of this could leave the Chancellor with a funding gap that it might be tempting to fill by raising business taxes and/or personal taxes. But by 2007/08 when the problems really start to bite and with demands for extra spending on transport and policing but with most of the pot already earmarked for health it will be tempting to look to the business community to help bear the burden.
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