MNI ANALYSIS: UK Fiscal Options if the Manifesto is Breached

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• We are now less than two months away from the UK Budget (26 November), an event that could have huge significance on many levels for markets.
• We look at the impacts of increasing VAT - on CPI, fiscal revenue and monetary policy.
• We also look at the expected revenue from raising income tax or employees national insurance (NICs).
• The measures could have significant long-term implications on UK growth (including both consumption and incentives for companies to invest), monetary policy, long-term fiscal sustainability as well as the amount of gilts that will need to be issued in coming years.
• Media reports suggest that the HM Treasury expects around a GBP30bln fiscal hole that will need to be filled. And these reports came out before the disappointing August data.