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The UK may need $84 billion of tax increases to balance the books

Britain has experienced one of the worst per capita health problems in the world, with over 4 million Covid-19 infections and almost 122,000 deaths, as well as one of the poorest economic results.

According to the Institute for Fiscal Studies, if the Chancellor of the Exchequer Rishi Sunak wishes to balance the books, the UK will require tax rises of around 60 billion pounds ($84 billion). On March 3, when Sunak is expected to outline how he plans to resolve the ruinous legacy of a pandemic that has pushed government borrowing to its highest in peacetime and forced him to make 13 emergency statements since he took office a year ago, the alert sets the tone for the Treasury's budget.

"Growth may be fast enough for large fiscal deficits to dissipate largely on their own," said Paul Johnson, director of the IFS. "It's not a core expectation, though. More possibly, we are on course for unsustainable deficits that are continuing. A reckoning is highly likely, but not yet necessary, in the form of major potential tax increases.

The study, based on Citigroup estimates, suggests that the scarring left by the worst recession in three centuries could be worse than anticipated in November by the Office for Budget Responsibility. The IFS, however, said that now is not the time to try to repair the public finances, urging Sunak first to improve the recovery.

Tuesday's published study acknowledged that the outlook is not any clearer now than in November. By the middle of the decade, a central scenario will see Britain already borrowing around 130 billion pounds, 30 percent more than the OBR estimate. In a gloomy scenario, this could increase to as much as 190 billion pounds. The deficit will collapse to a pre-pandemic level of about 50 billion pounds if the economy continues to emerge with no sustained harm.

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