Budget blow for Rachel Reeves as UK’s growth forecast slashed
Rachel Reeves received a major blow on the plans to cut predictions in an important economic indicator for the UK by the budget observer – intensifying fears that should significantly increase taxes.
On the eve of a difficult Labor Party Conference in Liverpool, Independent To the Chancellor Budget Responsibility Office (OBR) may show that it will significantly reduce productivity forecasts in the economy, which will lead to lower economic growth.
This means that the chancellor should only find more money to balance the books in November only weeks ago, and one of the three major taxes of the Manifesto – income tax, VAT, or national insurance contributions from employees – bring more burden to the undertaking.
In addition, in 2030, a budget deficit, which means that economists should increase higher taxes than they had previously thought, will be left.
The chancellor wants Obr to fix the crime to reduce political damage to the 14 -year conservative government and previously “extreme optimistic” forecasts.
It is clear that no measures in the government, including 30 billion pounds of tax increases in the last budget of MS Reeves, will be accused of the revision for productivity.
He explained a senior resource Independent: “Obr will clearly state that the revision has nothing to do with the measures of this government.”
However, the news could not come at a worse time for the chancellor, which struggled to fill a black hole that was already estimated to be £ 40 billion.
Sources close to the Chancellor admit that the political impact on his budget was to olmayan deeply useless ”and prepared for an attack from the opposition parties.
But they recorded: “Indeed, OBR has been making a higher estimate of productivity for years than anyone, so they decided to review their measurements.
“If there is something, the problem was Tories [in government] Never meet the previously expected level of OBR. “
Tories claims that he will only blame him – – indicating that the Bank of England has lost the confidence of businesses and that the investment has stopped.
Economic efficiency is the measure of how efficiently used to produce goods and services (outputs) and is an important driving force of economic growth, higher income and advanced living standards.
England has been reduced to the number of economic productivity figures that have been estimated by OBR in recent years.
Professor Stephen Millard, Deputy Director of the Institute of Economic and Social Research (NIESR), acknowledged that Mrs. Reeves could not be accused of the decline.
“The revision means that without any policy changes, it means that OBR will now foresee a budget deficit in five years. Therefore, the chancellor has to raise taxes to close the gap.
“And the gap will be higher than there is no downward revision.”
Recently, Ms. Reeves has clearly confessed that the economy has not worked well enough ”. It was already under pressure to break the manifesto commitment and increase income tax or bring a series of reserve taxes.
Andy Burnham clearly changes Keir Starmer to the leader and delaying Nigel Farage and Reform to 10 points behind the UK, while Mrs. Reeves should be able to reversed economic indicators to support the government.
However, the decrease in productivity comes after a decline on the economic growth of the main international budget observer OECD.
Political opponents believe that Ms. Reeves’ efficiency savings unintentionally expenditure increases, as well as tax increases worse the situation.
Shadow Chancellor Sir Mel Stide said: “If Obr reduces productivity, the chancellor will only be accused. There will be no decrease due to the past, but Rachel Reeves’ future of England’s future.
“Business investment stops, the job is more heavier taxed and economic trust is decreasing – all under the clock of Rachel Reeves.”
“This is a direct result of Labour’s decision to increase taxes on jobs and to give up pro -growth reform. Instead of taking responsibility, Chancellor already reaches his usual excuse: blame everyone.
“But the numbers don’t lie – this is the chaos of labour.”
Ms. Reeves’ tasis of the Treasury, the leading economists, who criticized the term, fell with him about the long -term problem with productivity.
However, he warned that he did not do enough to change the tendency to productivity.
Former Treasury Minister and Goldman Sachs Head Lord Jim O’Neill was appointed as a consultant to Mrs. Reeves while in opposition. Independent: “Given that the economy has done better than the predictions of consensus so far in 2025, I don’t think you can really blame the current government.
“However, they did not do enough with their frames to increase public investment expenditures to ensure that OBR increases OBR’s previous enthusiasm.”
Shanker Singham, President of the Growth Commission, warned the UK economy about the need to “reset”.
“I think all governments are based on 30 years ago. In this period, it is clear that the economic growth in the US and G7 is anemic except the US. These countries are paying lip service while doing everything that damages economic growth.”
Iz We have arranged the price of energy upwards and made the labor markets less flexible, which is a great driving force of GDP’s growth per capita.
“In the United Kingdom, we have not been able to get a ax to the planning arrangements connecting developers, so that nothing can be built.
Ms. Reeves, who announced the investments in Red Wall at Southport on Saturday, has recently announced a series of major projects, including changes in planning laws to try to bring a second runway and economic growth at Gatwick Airport.
The Treasury said he would not comment on Obr’s estimates about “speculation ..
