Chancellor’s Plans Under Scrutiny
Rachel Reeves is on the verge of lifting taxes in the autumn budget, according to a leading economist, although the Chancellor insists that her plans are "fully financed". Paul Johnson, Director of the Institute for Financial Sciences (IFS), warned that every step in the wrong direction for the economy before the next tax event would almost certainly trigger more tax increases.
Economic Concerns
The Chancellor’s expenditure check determined the state budgets until 2029, with plans including £29 billion for daily NHS editions, £39 billion for affordable and social apartments, as well as boosts for defense and transport. These plans are based on what she presented in the budget in October, which included controversial tax increases for employers and increased loans to support public services.
Tax Increases
The Labor government has long sworn not to collect taxes on "workers", but Ms. Reeves refused to completely rule out tax increases in her next budget, citing the insecure state of the world. The Conservatives have claimed that they would have to increase taxes almost certainly, with the shadow chancellor accusing the government of having abused the economy. Taxes on companies had "destroyed" growth and increased expenses "inflationarily", according to the shadow chancellor.
Economic Growth
New official figures showed that the economy contracted by 0.3% in April, more than expected. Ms. Reeves admitted that the numbers were "disappointing", but pointed out more positive figures from previous months. The Chancellor hopes that Labor’s plans will deliver more jobs and increase growth, with large infrastructure projects being implemented across the country.
Warning from the IFS
The IFS warned that further contractions in the economy and poor forecasts from the Office for Budget Responsibility are likely to necessitate increases in national tax to meet budget responsibility. The Chancellor’s expenditure check already includes an increase in council tax by 5% to help local authorities, which the IFS described as a "sting in the tail". However, Ms. Reeves said that it shouldn’t go up, emphasizing that her plans are fully costed and financed.
