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| Coronavirus: Britain faces tax rises or spending cuts, OBR warns | Coronavirus: Britain faces tax rises or spending cuts, OBR warns |
| (32 minutes later) | |
| The UK faces more taxes rises and spending cuts to stop its debt pile getting out of control, the country's spending watchdog has warned. | The UK faces more taxes rises and spending cuts to stop its debt pile getting out of control, the country's spending watchdog has warned. |
| The Office for Budget Responsibility (OBR) said the economy was on course to shrink by 12.4% in 2020, with borrowing set to rise to a peacetime high. | The Office for Budget Responsibility (OBR) said the economy was on course to shrink by 12.4% in 2020, with borrowing set to rise to a peacetime high. |
| This would mark the biggest economic decline in 300 years. | |
| Official data showed the economy grew by 1.8% in May, a month after suffering the biggest contraction on record. | Official data showed the economy grew by 1.8% in May, a month after suffering the biggest contraction on record. |
| The OBR said the coronavirus pandemic had "materially altered" the outlook for the public finances. | |
| It said the government would need to re-impose austerity measures to fix some of the permanent damage caused by the crisis. | |
| Its Fiscal Sustainability Report said: "In almost any conceivable world there would be a need at some point to raise tax revenues and/or reduce spending (as a share of national income) to put the public finances on a sustainable path." | |
| 'Smaller economy' | |
| It warned that economy would not get back to its pre-crisis size until the end of 2022, while unemployment was likely to rise to 12% by the end of this year, falling back to 10.1% in 2021. | |
| It said the government was on course to borrow £322bn this year to pay for the shortfall between tax revenues and public spending. | |
| This will push Britain's debt share to 104.1% of gross domestic product (GDP). | |
| The OBR's projections assume a slower recovery than the watchdog outlined in April, with a coronavirus vaccine found in about a year. | |
| They also do not include the Chancellor's £30bn package unveiled last week to protect jobs and boost the economy. |