Economic trends: election mood music points to tax rises
Tax rises look assured whoever wins the election say Harris & Co chartered accountants Northampton
The coalition’s previously stated aim of cutting the deficit to £40bn by this year has been missed, and missed by some margin - the latest figure is almost £100bn.
When including forecast numbers for the current financial year, the government will have borrowed more than £550bn over the course of this parliament. This represents around £21,000 for every UK household. Our national debt now stands at £1.4 trillion, the interest payments on which total almost £50bn each year.
With all the major parties agreeing on the need to cut the deficit, it isn’t hard to draw the conclusion that the level of taxation will have to rise at some stage. Whoever gets into power is going to be under huge fiscal pressure, even concerning the ring-fenced areas of the NHS and education.
Yet there is a considerable gap between the planned fiscal tightening announced by each major party and the effect of the policies they have announced so far. Any deep spending cuts are likely to prove unpalatable to the electorate and tax increases therefore look the easier option.