Budget boost for Reeves as IMF growth forecast rises after inflation battle ‘largely won’ – live
Rachel Reeves will announce Labour’s first Budget since coming into power on 30 October, leading one of the most anticipated fiscal events in over two decades.
Ahead of her announcement, the chancellor has welcomed an upgrade to the UK’s economic forecasts from the International Monetary Fund (IMF). The financial agency even said the country’s battle against inflation has “largely been won.”
The country’s GDP is now predicted to grow by 1.1 per cent in 2024 – a major uplift from the 0.7 per cent forecast in July.
Ms Reeves said the new forecast was “welcome” but that there is “more work to do.” She added: “The Budget next week will be about fixing the foundations to deliver change, so we can protect working people, fix the NHS and rebuild Britain.”
New figures from the ONS also show that government borrowing rose to £16.6 billion last month marking the third highest September borrowing since records began, according to the Office for National Statistics (ONS).
This has brought borrowing in the year to date to £79.6 billion – £6.7 billion more than forecast by the Office for Budget Responsibility. The ONS says public sector pay rises contributed to the unexpected rise.
We’ll be bringing you all the latest updates ahead of the big event on 30 October here, on The Independent’s liveblog.
Key Points
Inheritance tax already up 10 per cent as Reeves looks to squeeze levy in Budget
Britons are already paying more inheritance tax as Rachel Reeves looks to squeeze millions more from the levy, official figures show.
Payments swelled the Treasury’s coffers by £4.3bn in the six months since April, £400m more than in the same period in the previous financial year and a rise of 10 per cent, new data from HM Revenue and Customs shows.
Borrowing figures show “scale of public finances challenges” says expert
Government spending so far this financial year was £11.5 billion more than forecast by the OBR, points out The Resolution Foundation, which tallies with Rachel Reeves’ claim of a £22 billion “black hole” in the public finances.
The foundation’s senior economist Cara Pacitti said: “Six months into the financial year, Britain is borrowing £6.7 billion more than expected at the time of the Budget in March.
“This reflects central government spending which is £11.5 billion higher than anticipated, largely due to public sector pay rises and higher running costs.
“Today’s data highlights the scale of the public finances challenges facing the Chancellor as she grapples with overspending today, the need to avoid austerity in the future, and having to fund extra public service spending through tax rises.”
GDP due to grow in 2024 in major uplift, says IMF
The IMF has said UK gross domestic product (GDP) is due to grow by 1.1 per cent in 2024 – a major uplift from the 0.7 per cent growth forecast from July.
The UK economy is then expected to grow by 1.5 per cent in 2025, with the IMF maintaining its prediction from earlier in the year.
The IMF report also found that UK inflation for 2024 is set to be slightly higher than expected at 2.6 per cent, having previously pointed towards a 2.5 per cent reading.
It likewise slightly increased its inflation projection for 2025 to 2.1per cent from 2per cent in its previous outlook.
Unemployment is also set to be slightly worse than previously expected by the IMF, according to the latest report.
It said the UK unemployment rate is set to have been 4.3per cent for 2024 as a whole, compared with a previous 4.2per cent estimate.
Rachel Reeves boost as battle against inflation has “been won”
Rachel Reeves has welcomed an upgrade to the UK’s economic growth forecasts from the International Monetary Fund (IMF) as it said Britain’s battle against inflation has “largely been won”.
The chancellor stressed that there is “more work to do”, but added “it is welcome that the IMF have upgraded our growth forecast for this year”.
Ahead of her first financial statement as chancellor on Wednesday, Ms Reeves said: “The Budget next week will be about fixing the foundations to deliver change, so we can protect working people, fix the NHS and rebuild Britain.”