PwC: UK needs to raise £20bn

Date: 9th March 2010

The UK will need to raise £20 billion through tax increases or public sector spending cuts in order to "close the fiscal gap" by 2013-14.

This is the view of PricewaterhouseCoopers (PwC) following the publication of the organisation's latest Economic Outlook report.

PwC has based the estimate on expected GDP growth, saying the UK's GDP will rise by a "modest" one per cent this year and rise to around 2.5 per cent next year.

John Hawksworth, the organisation's head of macroeconomics, explained: "Our projections are based on a more cautious view of medium-term growth potential than the Treasury.

"We assume the same 5 per cent of GDP permanent loss of output due to the recession as the Treasury, but assume that the underlying trend growth rate from 2008-09 onwards is 2.25 per cent per annum, rather than the Treasury's 2.75 per cent central estimate and what they describe as a 'cautious' assumption of 2.5 per cent used in their own public finance projections."