A second British think-tank has said the British government will probably have to raise taxes to keep public finances on track.
While the National Institute of Economic and Social Research predicted 'robust' growth and said interest rates would need to rise again this year, it also warned in its Economic Review that the outlook for public finances had deteriorated.
It said Chancellor Gordon Brown was likely to break his fiscal Golden Rule in the upcoming fiscal year that begins in April unless he hiked taxes. The Golden Rule states he may borrow only to invest over the economic cycle.
NIESR's comments echo similar ones on Wednesday from the Institute for Fiscal Studies.
The two warnings come ahead of an expected spring general election which could give the Labour Party an unprecedented third successive term in office.
