Reeves warned she must raise taxes or cut spending to plug £41bn black hole
The upper economists should tear the Rachel Reeves’ upgrade or flagship borrowing rules, labor U -turns, higher borrowing and stagnant economic growth to fill the £ 41 billion of black holes left.
The National Institute of Economic and Social Research (NIESR), a leading economic thinking tank, said that he could look at the expenditure deductions in the autumn budget of Chancellor as a way to raise the money required to improve the lack of stability £ 41.2 billion until 2029-30.
The report said that the chancellor was left with a “impossible triple” while trying to meet the financial rules while fulfilling expenditure commitments and fulfilling a manifesto commitment not to raise the taxes on working people.
However, in the last expenditure examination, the tax increases are more likely to squeeze the department budgets.
Chancellor is under increasing pressure to raise income tax or to think of a reserve tax on the rich.
The estimation of the thinker, 10 percent of the poorest people, who have 2.8 million households, has seen that living standards fell by 1.3 percent under labor and was about 10 percent lower than foreplay.
Professor Stephen Millard, Niesr’s macroeconomic director, said that “a reliable, continuous increase in taxes” due to the “deteriorating financial appearance olmayan that does not help by Labour’s U-trailers on welfare cuts.
The authority warned the markets that the Treasury will have to take place in the first year to declare that it is determined to increase even further.
Speaking at a press conference on Tuesday, Prof Millard warned that the 4.9 billion pound bumper that the chancellor put forward for him was “really very thin, and that he would completely erase“ a small change in financial conditions ”.
“Only 1.3 percent growth and the target with inflation, if to meet the financial rules, the October budget, taxes or expenditures, or both for the chancellery to reduce both things do not seem good things,” he added.
Although the thinking organization dragged its economic appearance for the UK, a growth of 1.3 percent for 2025 comes from an estimation of 1.2 percent in May. However, it reduced the forecast from 1.5 percent to 1.2 percent next year.
Prof Millard also suggested that the chancellor could rewrite the financial rules of the Chancellor with a new framework over the long -term aspect of his debt trip instead of judging a five -year debt in the future, as the existing rules dictated.
He said Independent The government should based financial projections on existing taxation and expenditure levels rather than planned increases or decreases.
The latest warnings come, although it promises not to come back for a bigger tax increase after opening a £ 40 billion in the first budget last year’s first budget last year.
Niesr’s findings will put pressure on him to find innovative solutions in front of his budget in autumn. In July, Mrs. Reeves said that the cabinet, the gaps of the wearing gaps will no longer be “a big challenge” because it is no longer “low -hanging fruit”.
Last month, the government’s embarrassing climbing to the planned welfare deductions, the Labor Party’s benefit reforms were almost completely broken and the design of the bill fell from £ 5 billion.
Meanwhile, the new figures from the National Statistics Office published in July, the borrowing-public expenditures and the differences between taxes and the difference-borç interest payments increased to a higher £ 20.7 billion than expected.
Shadow Chancellor Mel Stide, who responded to the NIESR report, said: “Experts fit Labour’s economic false management. Although Rachel Reeves said he would not return for more taxes, he made a black hole that should be filled with more tax increase in the country’s finance.
“The labor force will always reach the tax -raising arm because they do not understand the economy. Businesses are closing, unemployment has increased, inflation has doubled and the economy is shrinking. And the labor rejects more damaging tax increase for investment.
“Under new leadership, only conservatives believe in solid money and low tax.”
Chancellor has set itself two financial rules-the “Stability Rule”, which enables the pairing of daily expenditures to tax revenues with tax revenues, and the “investment rule olan, which requires the government’s debtor and the government to reduce the net financial debt as the share of the economy.
OLD TORY Chancellor Nadhim Zawi Independent: “Iron -coated financial rules of the chancellor may need to be melted after a year of stagnant growth and turbulent global conditions.
“If the chancellor wants to unlock significant growth, tax revenues and investment, he should reconsider the domestic tax regime and create a really competitive plan – foreign investors will invest and spend in the UK if the correct incentives are given.
“He would have the right to reduce the bureaucracy that drowns the inflated waste of the government and rapid growth.
The Treasury was contacted for a comment.
