Despite a prediction of strong economic growth in the UK over the next two years, City economists warned that Chancellor Gordon Brown will still need to raise taxation after the election to cover a “black hole” in the public finances.
Using the Treasury’s own data as a basis for its economic forecast, the Ernst & Young ITEM Club on Monday predicted strong economic growth of 3.25% for the next two years.
However, they accused Brown of engineering a classic “pre-election boom” and ignoring a £10 billion gap in the Treasury accounts that will need to be rectified by raising tax revenues.
According to the London Evening Standard, the group’s chief economist Peter Spencer envisaged that taxes will likely be increased immediately after the next general election, expected some time in 2005, to make up the shortfall.
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