What things do you think Rachel Reeves might have to do - will she raise taxes?
Looking for comment on the IFS report published today.
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The economy has been reeling since the tax increases announced in the Budget so any further taxation will be high risk at best, reckless at worst. Business confidence in countless sectors has been shattered and many firms have been battening down the hatches for several months now. Whatever the Chancellor does, you could argue that the damage has already been done.
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Rachel Reeves faces a tough balancing act—plugging the UK’s fiscal black hole without spooking voters or businesses. Expect tax rises in disguise: stealth freezes, tightened loopholes, and higher levies on wealth and corporations. The big question—will she dare touch income tax or VAT? That’s the political gamble to watch.
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Reeves' decisions made in the October Budget are now piling additional distress on many, with spending cuts on state services now needed to fund her self-generated shortfall. Unfortunately, some additional tax income is inevitable, probably from small businesses, but a raid on personal assets could be an easy way to raise extra money, which will infuriate the nation yet again.
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The writing was on the wall straight after the October budget - the plan was never going to work, no matter how much the chancellor claimed it was a budget for growth, all her actions were in contradiction to that. Expect tax hikes, probably in income tax with "the world has changed" as an excuse for breaking election promises as well as a major cut in state benefits to help balance the books.
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Rachel Reeves faces tough fiscal decisions, and tax rises could be on the table to address public spending pressures. With strained public finances, she may target wealthier individuals through changes to Capital Gains Tax or Inheritance Tax rather than broad income tax hikes. Freezing tax thresholds (fiscal drag) could also continue, quietly increasing tax revenue. However, raising taxes risks dampening economic growth, so she’ll need to balance this with pro-business policies and investment incentives. The real challenge will be maintaining fiscal discipline while funding key services without stifling business confidence and consumer spending.
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The only thing reeves should be thinking about is when she will resign.
The current move in yields isn’t down to her and more down to Germany removing the debt brake, but it’s not the point.
Her taxation policies have sullied the UK’s economy to such a turgid level that we now should be extremely concerned about what happens to our yields due to external issues.
Raise taxes to do what? Dampen demand even more? This is more a BE issue right now, and since they do not care about their QT pace of selling as the treasury indemnifies the losses, they will likely keep shifting yields higher by selling off the long end.
And absolutely woeful situation that is caused by some of the most talentless, mediocre and inept economic policy leaders I think we have ever had.
The current move in yields isn’t down to her and more down to Germany removing the debt brake, but it’s not the point.
Her taxation policies have sullied the UK’s economy to such a turgid level that we now should be extremely concerned about what happens to our yields due to external issues.
Raise taxes to do what? Dampen demand even more? This is more a BE issue right now, and since they do not care about their QT pace of selling as the treasury indemnifies the losses, they will likely keep shifting yields higher by selling off the long end.
And absolutely woeful situation that is caused by some of the most talentless, mediocre and inept economic policy leaders I think we have ever had.
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It’s possible that we will see further cuts to public spending, which could put even more pressure on essential services like policing and the NHS. Additionally, we’ll need to brace for potential tax increases, with the property industry likely to bear some of the brunt. After a period of relative stability in the mortgage market, any drastic action could once again send shockwaves through our industry and the wider property market. All in all, this isn’t going to do any favours for the cost-of-living crisis and inflation.