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Government 'needs to cut deficit by additional 2% of GDP'
Accountancy News |
30/04/2010
The UK government needs to cut the nation's budget deficit by an additional two per cent of gross domestic product (GDP), it has been claimed.
The influential think tank the National Institute of Economic and Social Research predicted that GDP will grow by one per cent this year followed by two per cent and 2.2 per cent growth in 2011 and 2012 respectively.
It added that once a sustained recovery is underway it is vital to make additional deficit reduction worth two per cent of GDP to avoid debt downgrades.
"Large government debts should exist only after wars and crises. After the crisis is over we have to rebuild the shock absorbers to prepare for the next one," it added.
The body suggested that spending cuts and tax hikes will need to be deeper than previously anticipated in order to achieve this.
Last week, preliminary data from the Office for National Statistics highlighted that GDP grew 0.2 per cent between January and March 2010.
Posted by John Lynes
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