The problem:

– $1.3 trillion debt.

– Budget deficit is 11% of GDP

The planned solution:

– Increase VAT from 17.5% to 20% by January

– Axe treasury department looking into adopting the Euro as the common currency

– Public sector pay freeze

– Child tax benefit freeze for 3 years

– SMB tax rate from 21 to 20%

– plan to reduce corporate tax rate to 24%

– bank levy to be introduced by January

– 28% on capital gains

The UK is facing hard times. Its budget deficit to GDP is second only to Ireland in Europe. Its domestic demand was -1% during 2009 while that of Canada was +2.6%. The Harper government also plans to cut the corporate tax rate to 15% by 2012 while Michael Ignatieff has said that he would freeze corporate taxes at 18%. In October 2009, the IMF had predicted the UK’s net debt to increase to over 90% of GDP while Canada’s net debt position stands under 30% of GDP (and debt-to-GDP ratio about 35%). Canada’s absolute debt stands at $529 Billion and this country’s deficit stands at $56 Billion.

Here is the UK budget released today: