Rachel Reeves autumn Budget will see significant tax rises

Two different reports have directed the economic gloom of the UK in the last four days.

The economic figures on Friday showed a monthly decrease in the growth of the UK or GDP in May. At the beginning of this week, official estimation, Budget Responsibility Office (OBR) said that Britain’s state debt levels may three times the economy, including “eye scary” risks, including the possibility that the economy may rise to the economy.

Two very different timeline – economy in one month and the time of the half -century public finance.

In another moment, both may have been ignored to a great extent. Monthly GDP figures are very variable and what does a debt estimate begin to mean for 2075? What would the treasure estimate in 1975 tell us about this year?

However, these very different graphics are the tone of some difficult judgments required by autumn and harsh calls on what happened in the next half decade.

Really unusual thing OBR’s long -term risk and sustainability report It was the power of the words of his boss Richard Hughes.

Based on reasonable assumptions about costs and growth, “Britain cannot meet the promises shown to the public.”

The report also stated that a model of U -turn on tax and expenditure changes on more than one government.

It came in the days after the government’s reversal on welfare savings and winter fuel payment.

Among the 36 advanced economy, Britain has found that it has the fifth highest debt, the highest fifth -year borrowing and the third highest the highest borrowing costs and left it “vulnerable” compared to future crises compared to other countries.

The open message was that it was not a long -term solution to increasing daily expenditure prints.

However, more expenditure pressure can be stubborn by geopolitical and social changes.

OBR’s current estimates assume that the pandemic increase in inadequacy and disability cases will return to normal by 2029.

This is very uncertain. Local councils are currently spending 58% of their income for social care for adults and children, and some councils spend more than 80% spend.

4.6 billion £ special financial arrangement for cope with balloon special education needs budgets have risks of mass local authority bankruptcy risks.

The promise of 3.5% to the new NATO target will cost about 40 billion pounds per year until 2035.

OBR’s report was basically a polite objection to some realism about the upcoming elections.

A government with a majority and four years is expected to normally have the power to make such decisions.

Like Pointed before the last electionEspecially on taxation, there were very few attempts to flatten with the public.

The big picture is that the budget of this autumn can see a tax increase of £ 10 billion to £ 20 billion.

Furthermore, Trump’s tariffs triggered deep uncertainty. This increased the British government’s borrowing costs. At the same time, they also lead to a more fundamental change on the basis of the global economic system, and the dollar and the US government debt are no longer appreciated as an unidentified safe paradise.

How can the chancellor respond to these difficulties?

He may choose to rebuild the so -called “ceiling gap” to give him the chance to meet the borrowing limits imposed. Currently this buffer is very tight £ 10 billion.

Despite some concerns of the deputies, Reeves said it would depend on the plans of not borrowing to finance daily expenditures and ensure that the government debt falls as a share of national income until 2029/29.

However, it is considering the advice of setting the plans of the international money fund once a year, not both in spring and autumn.

However, this autumn’s budget may need to have a kitchen sink approach, the chancellor throws everything he has to correct public finances.

The ministers did not abandon the idea of finding savings on the welfare invoice of health.

A debate opens a discussion about whether the benefit of personal independence payment (PIP) designed to help pay physical equipment is the right tool to manage a special increase in mental health health.

On the other hand, while politicians accept the cost of the state’s retirement cost, this policy seems to be completely impregnated politically.

So we go to significant tax increases. . The more expected freezing on the income tax thresholds will not be enough.

The noise around the reserve taxes, baby explosions to their children, indicate that the equality of housing in trillions of kilos starts the collective transfer of property and inheritance.

Wait to finance the costs of a society that lives without giving this burden to the households who work completely, and expect to think too much in water to predict abundant income.

Of course, great hope is the return to correct the way for solid economic growth.

Reeves’ financial rules left space for longer -term investments in the infrastructure, but planning reforms take a little time to give a construction explosion. The position of the UK as a relatively stable island in the trade sea of the UK should also give dividends.

Some of the most important businessmen in the world, such as Jensen Huang of Nvidia, were up to themselves to praise England’s investment potential for Frontier Tech.

The latest economic news has been getting a little stronger at the level of confidence in the last few weeks, and more interest rate cuts are on the way.

Some city economists say that gloom is exaggerated and that we are “worst”. British stock exchanges and pounds continue to be strong.

This balances the long -term difficulties determined by OBR, balances books and increases the economy.

A government that still lasted for four years has the necessary power to be, but expressed his concerns about his authority last month.