A report released by the Ernst & Young ITEM Club, an economic forecasting group, has suggested that Chancellor Gordon Brown misjudged the British economy's growth prospects for this year, and that the government will be obliged to increase taxes still further as a result.
On Monday, the group released predictions of a 1.8% growth in UK GDP this year, compared to the more optimistic 2-2.5% predicted by the government.
'We always believed the Chancellor's forecasts were decidely optimistic, but now they begin to look unattainable, ' Professor Peter Spencer, the ITEM Club's economic adviser told Sky News yesterday, explaining that: 'The problem is that pre-committing to a very high and rising level of spending puts you in a bit of a fix.'
The Ernst & Young sponsored body suggested that the government may be obliged to look at increasing duties, and examine personal allowances in order to create some room to manoeuvre.
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