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Labour 'must choose between tax increases and spending cuts'

17th September 2009

Ministers must choose between raising taxes or making cuts to public spending in order to reduce the current deficit, it has been claimed.

The proposal is based on analysis by the Institute for Fiscal Studies (IFS) of internal Treasury projections leaked to the Conservative Party.

Plans outlined by the Treasury involve cutting total public spending by 0.1 per cent over the three years to the next spending review.

The IFS claims that this would be the 'tightest squeeze in spending ... since the UK was negotiating its spending plans with the International Monetary Fund in the late 1970s'.

Conservative shadow chancellor George Osborne believes that the tightening should be implemented quicker, starting from next year.

Mr Osborne's economic programme proposals include lowering corporation tax and creating a simpler system overall.

Meanwhile, the Liberal Democrat Party's Vince Cable thinks the Treasury has understated the problem, although is wary of any sharp cuts next year during the anticipated economic recovery.

© W&G Foyle Ltd
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