(RTTNews) - Monday, the Organization for Economic Co-Operation and Development or OECD warned that U.K’s rapidly rising government deficit would reach close to 14% of the country’s gross domestic product by 2010.

In its economic survey for the U.K, the OECD suggested that the government should cut spending rather than going for a hike in taxes to repair a deficit in public finance.

In addition, the OECD said the downturn has hit the British government’s tax receipts significantly. According to OECD projections, the gross government debt-to-GDP ratio is now on course to reach around 90% by 2010.

The Paris-based think tank said the short-term policy priority must be given to improve conditions in credit markets. It added that it is essential that the supply of new lending is not held back any longer by banks with insufficient capital to meet losses.

The OECD also said full nationalization of financial institutions with government having substantial stakes in these firms, would strengthen government’s contribution in reviving lending. But, any nationalization should be “temporary and well managed,” it asserted.

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