Green Budget Predicts Fresh Tax Increases; the Issue of Whether the Letter of the Golden Rule Will Be Met or Not over the Current Economic Cycle Is Very Finely Balanced National Institute for Economic and Social Research
Byline: Nevill Boyd Maunsell Economics Editor
The prospect of more increases in National Insurance contributions was raised yesterday by the influential Institute for Fiscal Studies, which warned it was 'touch and go' when Chancellor Gordon Brown breaks his own 'golden rule' and ends up borrowing to fund the Government's running expenses over the economic cycle.
A similar warning came from the National Institute for Economic and Social Research, which cautioned 'The issue of whether the letter of the golden rule will be met or not over the current economic cycle is very finely balanced'.
At the same time a European Commission report said that Britain risks following the examples of France and Germany by breaching the Stability & Growth Pact between now and the 2008/09 tax year.
This rules that a nation's budget deficit should not be more than three per cent of the national income.
Publishing its annual 'Green Budget', the IFS insisted that the Chancellor does not face a financial crisis.
'By historic and international standards the Government's books are in good shape,' said Mr Robert Chote, director of the IFS.
They urged the Chancellor to avoid 'disruptive policy changes', and to keep within his own fiscal rules as the Treasury's chosen economic cycle nears its end in 2005/06. …