Cliff Notes
- Rachel Reeves must go beyond merely addressing the estimated £22bn public finance black hole or face repeated fiscal challenges, according to the Institute for Fiscal Studies (IFS).
- UK economic growth was recorded at a modest 0.3% for the three months ending in August, despite claims of being the fastest-growing Economy in the G7.
- Tax increases are deemed unavoidable by economists, with income tax hikes suggested as the most effective means to raise necessary funds without complicating the system.
Tax hikes or risk ‘groundhog day’, Chancellor told as limited growth recorded
Rachel Reeves faces the prospect of another “groundhog day” unless next month’s budget goes further than plugging an estimated £22bn black hole in the public finances, according to a respected thinktank.
It comes as latest official figures showed the UK economy grew 0.3% in the three months to August, limited growth, despite the Treasury saying it is the fastest growth in the G7.
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The Institute for Fiscal Studies (IFS) said there was a “strong case” for the chancellor to substantially increase the £10bn headroom she has previously given herself against her own debt rules, or risk further repeats of needing to restore the buffer in the years ahead.
It said Ms Reeves could bring the cost of servicing government debt down through ending constant chatter over the limited breathing space she has previously given herself, in uncertain times for the global economy.
The chancellor herself said in an interview that tax rises were being considered, and appeared to concede she was trapped in a “doom loom” of annual increases.