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Warning of public finances 'black hole' over double-dip recession.

BRITAIN'S national debt could soar above pounds 2.3 trillion and unemployment could hit 3.8 million if the country suffers a "double dip" recession, an independent economic forecaster warned today.

The Centre for Economics and Business Research (CEBR) warned of a "black hole in the public finances" if the UK economy does not recover as swiftly as predicted by Chancellor Alistair Darling in the Budget in April. And it said that ministers are likely to have to slash public spending by pounds 45bn in today's money or pounds 123bn in real terms by 2017-18 - the equivalent of 3% a year for the next eight years - to get the debt back under control.

The bulk of this belt-tightening is likely to come from public sector cuts, as increases in taxation - such as the new 50% top rate due to come in next year - would reduce Treasury receipts in the long term by driving high-earners and businesses overseas, said the CEBR.

In a report published with campaigning thinktank the TaxPayers' Alliance today, CEBR chief executive Douglas McWilliams said that the most likely outcome is "major public spending cuts during the next parliament".
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Publication:Western Mail (Cardiff, Wales)
Date:Jul 31, 2009
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