Hedge fund boss Ray Dalio warns Britain trapped in 'debt doom loop'
It comes as Rachel Reeves prepares to further increase levies and slash spending in October to avoid breaking her fiscal rules. Analysts have warned that the Chancellor is facing a black hole of up to £30billion in the Autumn Budget.
'As the financial problems and the social problems worsen, having the effect of causing people with money to leave. That's a problem because – I don't know the exact numbers in the UK, but they're analogous to the US – 75 per cent of income taxes are paid by the top 10 per cent. So if you lose 5 per cent of the population in that category, half of those people, you lose 35 per cent or more of the tax revenue.'
He added: 'So you have this financial deterioration, that precedes social and economic deterioration that has caused migrations all around the world and so on. And there is only one way to deal with that. Both of our countries need a strong leadership of a strong middle. They have to have the war between those of the left and those of the right begin to end because difficult choices are going to have to be made, you know, like our countries had in World War II.'
It comes after the International Monetary Fund (IMF) last week cautioned that Ms Reeves faces having to take drastic action on spending unless she abandons her pledge not to hike taxes on working people.
Mr Dalio's comments echoed a warning from the head of the UK spending watchdog who earlier this month said there were 'reasons to worry' about surging debt, but cautioned against 'higher and higher taxes'. Richard Hughes, chairman of the Office for Budget Responsibility (OBR), told MPs that successive chancellors had been willing to see the debt pile 'ratcheted up and up over time'.
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