News Column

Raise taxes after election, says IMF

July 29, 2014

By Hugo Duncan, Daily Mail, London



July 29--Takes will have to rise after the General Election to get the country's budget back under control, experts warned yesterday.

The International Monetary Fund said both tax hikes and spending cuts 'should be explored' to balance the books by 2018-19.

Higher interest rates may also be needed to take the heat out of the 'overshooting' housing market and prevent a new crash, the watchdog added in its report on the UK.

The warnings came just days after the Fund predicted that Britain would be the best-performing major economy in the developed world this year with growth of 3.2pc nearly double the 1.7pc expected in the US and well ahead of eurozone rivals such as France and Germany.

'The economy has rebounded strongly and prospects are promising,' the IMF said.

The annual deficit has fallen since it peaked at over pounds sterling 157bn under Labour in 2009-10 but the government is still planning to borrow pounds sterling 95.5bn this year despite the economic recovery.

The national debt has also topped pounds sterling 1.3trillion for the first time or 77.3pc of national income and around pounds sterling 52,000 per household.

The IMF said that the Coalition's current budget plans are 'appropriate' but warned that whoever is in power after the election in May faces 'difficult choices' to finish the job of repairing the public finances.

'High deficits and rising debt mean that fiscal consolidation needs to continue,' it said.

'There is a clear need to put debt on a downward path to ensure long-term fiscal sustainability.'

The IMF also warned that sterling is too strong and is holding back exports. The global watchdog said the pound is overvalued by between 5pc and 10pc, having risen sharply over the past 12 months when it gained around 13pc against the dollar and 10pc against the euro.

It warned the strength of the currency is making British exports uncompetitive and preventing the long-awaited rebalancing away from domestic spending.

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(c)2014 Daily Mail (London, )

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Source: Daily Mail (London, England)


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