PwC publishes `Dealing with Debt`

Accountancy firm PricewaterhouseCoopers LLP has published a new report entitled `Dealing with Debt - Reforming public services and narrowing the fiscal gap`.

The report looks at ways of bringing public finances back into line after the economic crisis - and closing the `fiscal gap` (the difference between what the Government brings in and what it spends).

"Higher public borrowing is inevitable in the short term, but the government has a responsibility to plan now to put the public finances back on a sustainable basis in the medium term," said John Hawksworth, head of macroeconomics, PricewaterhouseCoopers LLP.

Since PwC doesn`t expect the economy to grow as fast as the Government does, "we estimate that meeting this target requires a fiscal gap of around £43 billion to be filled by 2013/14."

Mr Hawksworth went on to explain that closing the gap was "likely to require a combination of severe public spending restraint in the next Comprehensive Spending Review period alongside significant tax increases in 2011 and beyond."

"No-one likes to hear about higher taxes," said a debt management expert for Gregory Pennington, "but they may have a vital part to play in helping the economy recover from its current troubles. Even so, higher taxes could easily put individuals` finances under even more strain, making it even harder for them to avoid debt - or to focus on paying off the debt they already have."

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