Taxes 'must rise' £45bn annually to meet Budget target - papers

The Government will have to find an extra £45bn a year in tax rises and spending cuts by 2017/18, on top of the measures announced in the Budget, if it is to meet its own forecasts, an influential think-tank has warned.

The Daily Telegraph reports, the Institute for Fiscal Studies (IFS) said that in total the Government would have to raise £90bn a year to fill the black hole created by the recession, but only half of that was accounted for in Wednesday's Budget - 10pc through tax rises and 40pc in spending cuts .

"The Treasury forecasts now imply that the crisis has dealt a permanent hit to the Exchequer costing around 6.5pc of national income or £90bn a year in today's money," said Robert Chote, director of IFS.

That would mean an additional £2,840 in tax rises or spending cuts for every family in Britain, every year, on a permanent basis. Full story...

John Varley, the chief executive of Barclays Bank, believes the recession "feels deep and prolonged" and will last at least another year - a stark contrast with the more upbeat forecasts delivered by Alistair Darling in Wednesday's Budget, according to The Independent.

The gloomy assessment, delivered at the bank's annual general meeting yesterday, was made as the CBI published new figures showing that British industry faces the most difficult conditions for three decades.

Varley said that the UK economy was now facing a crisis that was "equally ugly" to that which the banking sector had suffered. "This recession feels deep and prolonged," he said. "We need to be realistic about when the inflection point will come... we're going to be living in difficult times, at least for another year." Full story…

Waning confidence in the Chancellor's Budget growth forecasts sent gilts sliding yesterday, with prices touching their lowest levels since the Bank of England unveiled its quantitative easing programme in early March, The Independent reports.

The yield, which rises as the price of a bond falls, on the benchmark 10-year gilt climbed to 3.51 per cent last night, up from 3.31 per cent on Tuesday and the highest since the Bank announced it would begin buying gilts and corporate bonds to increase the money supply and boost the economy.

The rise in gilt yields will worry the Treasury, with Alistair Darling's Budget revealing plans to sell a record amount of government bonds in order to finance his borrowing requirements. Any suggestion from the markets that the Government may find it difficult to find buyers for £220bn of new gilts would come as a huge blow. Full story...