By Sean O’Grady
Oct. 15 (The Independent) —A damning report by the European Commission on the long-term prospects for Britain’s public finances warns that Britain is at “high risk” of running unsustainable debts â€“ implying that the nation will be unable to service its debts and that only default or high inflation can relieve the burden.
That implies the high deficits will close the output gap to 0 with ultra low unemployment and high cap utilization.
And then taxes will have to go up to cool it down.
Sounds like a good plan to me!
The Commission’s 2009 Sustainability Report says that Britain will suffer a
“sustainability gap” of 12.4 per cent of GDP â€“ meaning tax rises or spending
cuts amounting to close to Â£200bn a year.