GORDON Brown will be forced to raise taxes by at least £10bn to tackle a persistent deterioration in the public finances, according to a leading forecasting institute, say this morning's papers.
The Times says disappointing growth of just 2% this year, prolonged weakness in consumer spending and slower increases in incomes will all hit the Treasury’s revenues in the next few years, forcing the Chancellor to raise taxes.
The National Institute of Economic and Social Research is reported as saying that despite Brown’s controversial reassessment of his “golden rule” for the nation’s finances last week, the improved picture this produced will not spare him from a requirement to raise tax.
The institute’s forecasts show the deficit on the Treasury’s current budget, which excludes investment spending and is the key measure for the golden rule, will average £10bn in the next three financial years, against Brown’s figure for an average deficit of just over £4bn a year.
MEANWHILE a bid for the London Stock Exchange (LSE) by Euronext or Deutsche Börse would “substantially lessen” competition, the UK competition watchdog is reported to have said by the Financial Times.
The paper says the Competition Commission will extend the length of its inquiry by up to eight weeks after its provisional findings that a takeover of the LSE by either of its European suitors would create difficulties for exchanges wanting to compete with the LSE in trading UK equities.
MORGAN STANLEY were told staff yesterday of plans to cut 1,000 jobs from its retail brokerage unit, the latest in a series of wrenching changes at the Wall Street bank, says the Guardian.
An internal memo leaked to the paper reveals it would make the cuts after it identified those "who are not up to our standards". Morgan Stanley will also cut the number of new broker recruits from 2,400 this year to 1,000 in 2006. The division has about 10,500 brokers.
AND DRUGS giant AstraZeneca yesterday said that chief executive Sir Tom McKillop will retire in January - a move understood to pave the way for the Scot to join Royal Bank of Scotland as vice-chairman before eventually succeeding RBS chairman Sir George Mathewson, says the Scotsman.
The development came as speculation also continued to soar that RBS will shortly announce a $2.5 billion (£1.4bn) deal to take a substantial minority stake in Bank of China.
RBS would comment on neither matter yesterday, says the paper. But it claims it is understood that McKillop, who has been boss of AstraZeneca since Astra merged with Zeneca six years ago, has been wooed by the Scottish bank for some time. McKillop had been due to retire from Britain's third biggest drugs company last March when he turned 62, but stayed on to allow new chairman Louis Schweitzer to settle into the role.
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