Oxford Street May 2 2025 in London.
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When UK Chancellor Rachel Reeves announced its government budget in the last autumn, Billion unveiled the Billion 70 billion (Billion 95 billion) to fund 40 billion tax increases, which often hit British affairs, which has been a one-time strategy, which is a one-order, a one-order, a one-order
However, the time has changed, and as the rewes try to balance the books and try to stick to her non -negotiable “Financial Rules” – while continuing Spend a spent on public services In the midst of an uncertain economic perspective – she may have no choice but more, more popular tax rise.
In the spring, in the spring, the treasury has a “headroom” of about 9.9 billion financial financial “headrooms”, rather than borrowing the main financial goal of tax receipts.
The financial and financial perspective is a more challenging fact, however, with high debt interest payments and weak tax vouchers converge with low economic growth forecasts.
Office for Budget Responsibility (OBR) said In March It expects the UK to record 1% in 2025 and 1.9% in 2026. The OBR is an independent financial and financial forecast that determines the government’s budget to see if they are likely to meet or escape its financial goals.
The subsequent growth forecast is now optimistic, economists say, and if OBR revisins its 2026 forecasts, it leaves a big dent – if not completely deleted – the government’s financial headroom.
That means the government has three options: the cost cut, increase the loan or increase the taxes.
Economists say that the tax hike is more inevitable at the end of this year, Reaves already Committed to enhancing public services and key divisional budget Last week, in her expenditure review, and that she is stubbornly stubbornly stubbornly funded by borrowing at the expenses of the government.
Tax ‘Gnats mustache’ goes away
“We hope that the government’s” headroom “is completely evaporated and the tax rise in the end of this year looks more inevitable,” said James Smith, an economist of ING’s developed markets.
If OBR reduced its 2026 growth forecast to 1.5% to 2026, it would already be half the government’s financial headroom.
“Our scenario analysis shows that as a result of financial headwinds, she can only deal with Billion 4 billion deficiencies, and if the forecast changes of OBR are more substantial. Perhaps more than more substantial. The Chancellor is facing a wide range of taxes and spending pressures,” he said.
When Sky News asked if she should be taxed this year, Reaves hesitated to answer the question, saying, “She is not going to write a budget for the future.”
“I will not go to write a four -year -old budget before we get the first year of this government,” he said, though he admitted that “the world is very uncertain at this time.”
Those comments came after a day of his spending review after a rude awakening to Chanceller – Primary monthly total domestic product data indicated last Thursday that the UK economy shrunk by 0.3% in April on a monthly basis.
On June 11, 2025 at the House of Commons in London, United Kingdom, Excheeker Nayak Chancellor Rachel Rachel Rachele was ahead of PKK.
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According to the Institute for Fisk Studies Director Paul Johnson, economic forecasts or public finances have not improved since last year, but the “reverse”.
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“No one should be in doubt that the Chancellor has some incredibly tough decisions and has balanced tasks to perform,” he said, adding in the post-corrupt review analysis, “Financial restrictions are very real and we can’t have everything we can want.”
As it seems to maintain that balance throughout the summer, clouds are already formed on the growth of the country.
Where the tax increase may occur
The government has already repelled some unattractive spending cuts, such as canceling pensioners’ winter fuel payments-and last week it announced a huge incentive for public services and divisional expenses, increasing the billions of pounds of health and defense.
Since the cost cuts are unlikely and do not resort to borrowing to fund daily expenses, the tax rise is her only real option.
It breaks the pledge of Reaves who avoid further tax robbery, and breaks the Labor party’s manifesto, does not increase income tax, national insurance (social security) contributions or not increase VAT, tax is added to more products and services.
Shadow Chancellor Rachel Reaves, Labor Leader Sir Keer Starmer and Deputy Leader Angela Rayer participated in a program to launch Labor’s election pledges at the scenes on May 16, 2024 in Perfleet, United Kingdom.
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Mujtaba Rahman, Managing Director of Europe at the Eurasia Group, said on Thursday that the Labor Party in -law is afraid of Ulation’s hopes for months.
“It is a financial way to violate the manifesto of Labor, but (Prime Minister Keer) Starmer does not want to do it.
Reaves are likely to aggregate several minor-scale risks-for example, the current freeze on income tax allowances and limits will be extended from 2030 to 2030, he said.
Other options are to restrict the tax solution on pensions, impose Billion 3 billion on the gambling industry, and shake the council tax, which is based on the property values of 1991.
“To Reeves, there is no easy answers to the question of how to add her amount,” Rahman said.
