Bankrupt Britain

"Britain faces £100bn cut in spending according to 'Bankrupt Britain' report" -

"BRITAIN faces years of painful adjustment as a result of the debt the government has taken on in the financial crisis, a report says.

Bankrupt Britain, written by City experts, says taxes will have to rise and the level of public spending will have to be cut by as much as £100 billion to put the government’s finances back into shape.

Its author, Malcolm Offord, a City fund manager with more than 20 years’ experience with Charterhouse, looked at the UK economy from the perspective of an investor considering putting money into a company.

Working with colleagues, he calculates that in the absence of government action, the national debt will balloon to more than 150% of gross domestic product over the next 10 years, compared with Labour’s “ceiling”, now breached, of 40%. The priority, he says, is to reverse the “profligate” spending that gave Britain an unacceptably big budget deficit at the start of the recession.

Reducing debt, the paper says, will require cutting the level of public spending by £60 billion by 2014 and £100 billion by 2020. Public spending is £623 billion this year, with a third going on social security.

Tax rises would also be needed, the paper says, focusing on an increase in the top rate of tax to 50%. But raising taxes too much would be self-defeating, hitting economic growth. "