© Reuters. A shop assistant counts piles of British Pound Sterling banknotes at an Apple store in London

LONDON (Reuters) – The British government should be wary of assuming its mammoth debt pile will always be so cheap to service or that inflation is dead and so must ensure fiscal security by pushing ahead with a digital tax, six former government advisers said on Monday.

The United Kingdom is facing its steepest economic decline in three centuries of modern British history and is borrowing vast amounts from the bond markets to inject money into the hemorrhaging economy.

Prime Minister Boris Johnson’s government should beware of rising debt costs and the surprise of an inflationary bubble, former advisers to prime ministers Theresa May and David Cameron said in a report for the Onward think tank.

“The volatile history of interest rates should make us wary of thinking low real interest rates are here forever,” said the advisers including Mats Persson, former adviser to Cameron, and Raoul Ruparel, a former adviser to May.

“The possibility of surprise inflation still exists,” they said. “In the 1970s, inflation peaked at over 25% in the UK, a level few had predicted only a few years earlier.”

The advisers, including May advisers Neil O’Brien and Will Tanner, said reform of the UK’s tax system was essential, including a digital tax.

“This should be prioritised regardless of concerns from partners such as the U.S. over a digital services tax,” they said.

The U.S. has threatened trade retaliation against European countries that create their own digital taxes as a way to raise revenue from the local operations of big tech companies such as Alphabet (NASDAQ:) Inc’s Google and Facebook Inc (NASDAQ:).

READ  Coronavirus outbreak: British Airways, Lion Air and Seoul Air suspend all flights to China
Disclaimer: Fusion Media would like to remind you that the data contained in this website is not necessarily real-time nor accurate. All CFDs (stocks, indexes, futures) and Forex prices are not provided by exchanges but rather by market makers, and so prices may not be accurate and may differ from the actual market price, meaning prices are indicative and not appropriate for trading purposes. Therefore Fusion Media doesn`t bear any responsibility for any trading losses you might incur as a result of using this data.

Fusion Media or anyone involved with Fusion Media will not accept any liability for loss or damage as a result of reliance on the information including data, quotes, charts and buy/sell signals contained within this website. Please be fully informed regarding the risks and costs associated with trading the financial markets, it is one of the riskiest investment forms possible.





READ SOURCE

LEAVE A REPLY

Please enter your comment!
Please enter your name here