Highlights
- Reeves says both tax rises and spending cuts are being considered for the Nov 26 budget
- Economic analysts estimate a potential £30 billion gap to be filled through tax measures
- Government borrowing costs have risen and welfare spending cuts have been dropped
- Growth forecasts are expected to be revised downwards
CHANCELLOR Rachel Reeves has said she is looking at both tax increases and spending cuts for the upcoming budget on November 26, confirming expectations that she will take steps to balance the country’s finances.
Economic analysts estimate that Reeves may need to raise about £30 billion through tax measures, after government borrowing costs rose more than anticipated and plans to reduce welfare spending were dropped. Growth forecasts are also expected to be revised downward.
“Challenges are being thrown our way... I won't duck those challenges,” Reeves told Sky News on Wednesday.
“Of course, we're looking at tax and spending as well, but the numbers will always add up with me as chancellor.”
Reeves has said repeatedly that she is committed to “economic responsibility” and will maintain her fiscal rules, including her main goal of balancing day-to-day public spending with tax revenues by 2030.
Before the general election in July 2024, Labour had pledged not to raise value added tax (VAT), national insurance contributions, or the rates of income tax. However, there has been increasing speculation that those commitments could be reconsidered as the government works to meet its fiscal targets.
The chancellor’s comments come as the Treasury prepares for what is expected to be a closely watched budget statement outlining the government’s next economic steps.
