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U.K. to Increase Spending and Debt to Avert Prolonged Recession
Monday, 24 November 2008 16:11:09 GMT  |  Roman Kadinsky, DailyFX Research
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Further weakness for the British Pound is possible as the U.K ramps up efforts to contain recession by pledging 20 Billion pounds of tax cuts, while increasing government spending and debt dramatically. The budget deficit is expected to rise to 118 billion pounds through March 2010. Such a deficit would be the largest among the G-7 nations, but may be warranted as Britain is expected to suffer the largest contraction of the group in 2009. To cover the spending, the U.K plans to sell a record 146.4 billion pounds of bonds. Fiscally, the U.K. will also increase the income tax level from 40% to 45% for earners over 150,000 pounds following the next election.

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