Rachel Reeves has set the date for the Budget amidst warnings of potential tax increases. The Chancellor will present the crucial statement outlining the government’s tax and spending plans on November 26. Reeves is working on strategies to ensure the economy benefits ordinary working individuals, with a focus on alleviating the impact of rising inflation on household budgets.
The decision to delay the Budget date is strategic, allowing for announcements on enhancing productivity in the autumn, with the hope that the Office for Budget Responsibility (OBR) will consider this in its forecasts. This will be Labour’s second Budget following their significant election win last year. In her first Budget, Reeves raised taxes on businesses, introduced VAT on private school fees, and increased capital gains tax to allocate substantial funds to the struggling NHS.
In a recent video message, Reeves emphasized that the UK economy is not fundamentally broken but acknowledged the need for improvement to better serve working people. She highlighted the high cost of living and the importance of receiving adequate returns for contributions made. The Chancellor echoed these sentiments, stressing the need to control day-to-day spending to manage inflation and borrowing costs effectively.
Experts have cautioned that tax hikes might be necessary to address the nation’s financial shortfall. The NIESR think tank warned of a projected £41 billion deficit in balancing day-to-day spending with tax revenues by 2029-30. Keir Starmer has reaffirmed Labour’s commitment to not increase taxes on working individuals, ruling out VAT, national insurance, or income tax hikes.
The Chancellor aims to steer clear of a Budget as extensive as last year’s, which saw £40 billion in tax increments. Despite challenges like reversing cuts to benefits and escalating borrowing costs, efforts are underway to bridge the financial gap. Prime Minister’s recent restructuring of the economic team in preparation for the Budget signals a proactive stance, with key appointments made to key roles to bolster economic strategies.
Amidst criticisms from former Tory PM Liz Truss, who warned of impending economic turmoil, Health Secretary Mr. Streeting dismissed Truss’s commentary, emphasizing the government’s responsibility in managing the economy effectively. Truss’s tenure, marked by a brief stint and financial turbulence, was scrutinized by Streeting, highlighting the cleanup efforts required to rectify past economic missteps.
