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Britain might need to raise tax revenues to fix deficit: IMF

[LONDON] Britain may need to raise more money from taxes to bring down its budget deficit after relying heavily on keeping a tight grip on public spending, the International Monetary Fund said on Wednesday.

"Deficit reduction since the financial crisis has relied mostly on spending measures," the IMF said in an annual report on Britain's economy.

"While the government should continue to seek the best value for money in public spending, a more balanced approach to deficit reduction may be called for in future," it said.

The impact of Brexit on the economy and Britain's low productivity growth could hit tax revenues, while demands on public spending would increase as the country's population grows older.

"Under these circumstances, greater reliance on revenue measures for consolidation (of the budget) than in recent years may be warranted," the report said.

The report also welcomed recent progress in the Brexit talks with Brussels but said the timeframe for negotiating a new trade deal was ambitious.