UK could see 'double dip recession'

Tuesday, February 16th 2010

A tax increase must happen in order for the UK to deal with its financial problem.

However, this could cause a "double dip recession", according to editor of Investment and Business News Michael Baxter.

"The government has got to raise money and there seems to be no alternative. The consequences are a possible move back into recession," he explains.

Mr Baxter's comments follow reports from the British Chamber of Commerce (BCC), which said that 41 per cent of companies think reducing the budget deficit should be the main priority of any incoming government.

Increasing National Insurance contributions from businesses would be the most damaging tax rise for them, the companies noted.

According to Mr Baxter, such an increase acts as a "tax on jobs", but to implement the alternative of increasing VAT would take a large amount of courage by the chancellor.

When asked by the BCC whether they felt the recession was over in terms of their business, 74.8 per cent of respondents answered 'no'.