'Public debt set to rise to dangerous levels'
'Public debt set to rise to dangerous levels'
Monday 7th December 2009
Public debt is set to rise to dangerous levels in the next year, according to a leading business group.The debt may exceed 90 per cent of Britain's GDP.
The British Chamber of Commerce (BCC) made the predictions in its latest economic forecast published today.
In advance of the chancellor's pre-Budget report on Wednesday the BCC suggests that this debt can only be reduced through fiscal tightening such as tax increases and cuts in public spending.
The report also states the pre-Budget report should not restrict the ability of the private sector to drive economic recovery. It warns that though the economy is in recovery there is still a serious risk of the UK suffering a double dip recession. For recovery to be sustained additional monetary stimulus and measures are needed to boost lending.
David Frost, director general of the BCC, said: "We need a thriving business sector to drive the UK's recovery, so it's vital that the chancellor's pre budget report avoids new business taxes, higher National Insurance contributions, or any measures that might damage investment, growth, and job creation.
"Given the perilous state of the public finances, we cannot afford any sacred cows when it comes to making spending cuts, no matter how politically desirable it may be."
David Kern, BCC chief economist, added: "The UK economy is probably now growing again but a relapse in activity is a real danger. Preventing a double dip recession must be the main priority.
"In the next two or three quarters, the recovery will be driven by the stock cycle and by the cumulative impact of huge injections of monetary and fiscal stimulus."
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