U.K. debt deeper than expected
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Steve Chiotakis: The British government has plunged even deeper into debt than many economists were expecting. It had to borrow more than $26 billion in August — the highest figure ever for that month. Our man in London, Stephen Beard reports.
Stephen Beard: The British government is caught in a double bind: tax revenues from the all-important financial sector have slumped, while public spending on items like unemployment pay and welfare is soaring.
Many governments face the same dilemma, but Britain looks to be the worst hit of the big economies. When the recession ends, the government will have to put up taxes and make cuts in public spending.
David Buik of the BGC group says those cuts will need to be savage:
David Buik: Really, it’s just about every single service, whether it be transport, defense, education — they’re all going to be affected. Cuts will be made, and taxation will go up, because it has to.
One likely candidate for the axe, he says, is the planned upgrade of the U.S.-supplied Trident missile system.
In London, this is Stephen Beard for Marketplace.
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