(MENAFNEditorial) (EMAILWIRE.COM, December 16, 2012 ) Cheshire, UK --
A report by the Institute for Fiscal Studies (IFS) shows that additional spending cuts and nearly 7 billion in more taxes are going to be inevitable for United Kingdom citizens in 2015 and beyond. The additional monies will be needed to make up for a government budget shortfall of 27 billion.
Pension and other benefits for older residents are especially at risk for taxation and cutbacks.
The IFS announced its finding one day after Chancellor George Osbourne requested 2 billion in taxes be collected from pensions as part of the Autumn Statement made to Parliament on Wednesday.
Austerity program initiated by the government are being extended until at least 2018 and will result in more than 1 million additional British citizens being placed into high tax brackets.
Despite the plan put forth by Chancellor Osborne, the measures will still not be enough to make up for the government's budget shortfall.
MILLIONS of hard-pressed Britons face yet more tax rises and benefit cuts in the three years after the 2015 General Election to plug a 27 billion black hole in UK Government coffers, it has been claimed.
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The think tank states that bit was "close to inconceivable" that the requested austerity measures could be avoided following forecasts that reveal continued sluggish growth that would leave the U.K. economy reduced by 3.6% smaller in 2016-17 than was expected earlier this year.
The U.K.'s Triple A credit rating is also at risk. Ratings agency Fitch said it that debt would be approaching the upper limit allowed to maintain the rating by 2015, and would likely lead to a downgrade.
An assessment of a country's ability to pay its debts is the basis for its credit ratings and often determines the interest percentage a country has to pay when it borrows money by selling government-backed bonds.
Chief Secretary to the Treasury Danny Alexander dismissed Fitch's warning. Stating that he did not regard credit rating agencies "as the be-all and end-all of this."
"What matters is the judgment the markets and the people who buy our debt to support our deficit make about the credibility of this country," Alexander said. "The test I apply is not what some external organization is going to say about the U.K., but whether we have got the right measures to ensure we continue to have that credibility."
In the IFS assessment, the Autumn Statement numbers point to several government agencies facing up to 16% in cutbacks going forward until 2017-18 with a significant increase in taxes, a cut to welfare programs or putting some of the financial burden on institutions like hospitals and schools.
"That begins to look close to inconceivable," IFS director Paul Johnson said. "Further welfare cuts and tax rises must be on the cards 27 billion-worth would be required to protect other spending in real terms entirely."
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