The UK’s debt crisis is mounting. This year’s borrowing is likely to be bigger even than last year’s record £156bn deficit. With bond markets getting jittery about sovereign debt, the coalition has one shot at cutting the unprecedented deficit. The Government’s emergency budget and spending review in the coming months must not shrink from the challenge. If it fails to take decisive measures, the cost of borrowing will balloon, and ultimately much more draconian cuts and taxes will be required. It’s time to act.
The impact of the recession on the gap between what the Government raises in tax and what it spends is around £74bn according to Office for Budget Responsibility estimates. This paper spells out the full range of measures necessary to fix the deficit over the next six years, by cutting public spending and raising taxes in a way that exemplifies social market priorities.