Politics latest: Reeves blames ‘severe’ Brexit impact on economy as she eyes Budget tax hikes

Rachel Reeves admitted she is looking at potential tax increases and spending cuts to fill the black hole in her budget; He said this was partly due to the ongoing impact of Brexit.

“Austerity, Brexit and the continuing impact of Liz Truss’s mini-budget have all placed a heavy burden on the UK economy,” the Chancellor said.

“People already thought the UK economy would shrink by 4 percent due to Brexit,” he said.

“Of course, we are now undoing some of that damage with the agreement we made with the EU earlier this year on food and agriculture, the movement of goods between us and the continent, trade in energy and electricity, and an ambitious youth mobility plan.

“But there is no doubt that the impact of Brexit is severe and long-lasting and that is why we are seeking to strike trade deals globally, with the US, India and most importantly the EU, so that our British exporters will have the opportunity to sell products made here around the world.”

Kemi Badenoch launched an attack on Rachel Reeves after the chancellor admitted she was considering tax rises in the upcoming Budget.

The Conservative leader wrote of X: “After the tax bombshell in last year’s budget, Rachel Reeves promised she wouldn’t be coming back for more. Now she’s finally accepting tax rises are coming.”

“There is an alternative; cut spending and lower taxes. Only the @Conservatives have a stronger economic plan.”

John Healey is currently in Brussels for a NATO summit outside the UK.

The defense minister met with other defense ministers and warned that Britain and NATO members would step up their response to Putin’s aggression.

Economists have warned the Chancellor faces a black hole of up to £50bn in his next budget, but has been told he cannot afford to fix margins by choosing smaller tax increases from a “Scrabble bag”.

Leading tax expert Dan Neidle, founder of Tax Policy Associates, said the “smart” way for Ms Reeves to raise taxes would be to “increase one of the main taxes, probably by expanding the VAT base”; This may or may not break the manifesto commitment.

Rachel Reeves will attend the annual International Monetary Fund (IMF) meeting in Washington DC today.

The chancellor will meet G7 finance ministers and take part in a Ukraine roundtable ahead of the G20 ministerial dinner on Wednesday.

This comes after the IMF warned that inflation in the UK will rise to the highest level in the G7 in 2025 and 2026.

Rachel Reeves has been dealt another major blow ahead of next month’s make-or-break budget as the International Monetary Fund (IMF) warns inflation will rise to the highest level in the G7 in 2025 and 2026.

The latest outlook report suggests British households will face the fastest-growing costs among the G7 group of advanced economies, driven in part by rising food and accommodation prices.

The report, described as “brutal”, casts doubt on the Bank of England’s hopes of cutting interest rates to a target rate of 2 per cent in the near future.

The IMF has said UK price inflation will rise more sharply in July than previously forecast; It expects inflation in the UK to average 3.4 per cent in 2025, rather than 3.2 per cent currently, and to rise from 2.3 per cent to 2.5 per cent next year in 2026.

It also lowered its 2026 growth forecast due to concerns about the job market, but raised its forecast for this year.

Sir Keir Starmer will face a debate in the House of Commons as questions mount over the Chinese spying case and the upcoming budget.

The Prime Minister will answer opposition questions at PMQs after his Government and the Crown Prosecution Service fell out over the release of vital evidence.

Number 10 accused the CPS of preventing the publication of a key witness’s statement.

The CPS hit back and insisted it was entirely up to the Government to release the evidence if it wanted to.