By Lea Pachta

According to the National Institute of Economic and Social Research (Niesr) sharp tax rises are needed to cut the deficit.

Niesr brought out a report which showed that taxes must rise sharply over the next decade to bring down borrowing. Taxes would need to rise by 6p on the basic income tax rate to get the budget deficit below 3% by 2010.

The think tank also said the UK economy faces sluggish growth and rising unemployment this year. Niesr said a big tax increase is necessary to protect the UK from the next financial crisis.

Niesr’s overall outlook for the economy is optimistic. They expect to see the global economy to grow 4% this year. This growth would be powered by developing countries such as China which experienced double-figure growth in the past year.

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