Saturday, February 21, 2009
High structural deficit
The main cause of public debt during recessions and their aftermath, is not in fact the cost of bail-outs(the media headline) but rather the collapse in tax revenues. The UK seems to be facing a huge structural deficit that will change the nature of taxation(up) and public services(down) for many many years to come. When I first read about 2030 being the estimated time of a recovery in public finances, I thought "surely not", but it would seem that for those in the UK aged around 35-40 the majority of their remaining working life will be in a regime of high taxation and lower social provision. Perhaps most won't notice lower social provision but almost certainly taxes will be noticed.