"Rachel Reeves pinned the need for expected tax rises on the actions of previous governments post-Brexit trading arrangements, austerity as the underlying reasons for a disappointing assessment by the official forecasters of the economy's productivity. That productivity has been held back by years of poor investment, and improvements have been slow. Lower productivity means weaker growth in the economy, hitting tax income and affecting assumptions about how much money the chancellor has to find to meet her financial rules."
"Reeves also pointed to other external forces - tariffs and supply chain disruption for the underwhelming performance of growth and inflation. But some of these were foreseeable. Even if the official assessment is worse than thought, productivity - a measure of the output of the economy per hour worked - has long been problematic. And when it comes to external factors, President Trump's trade hostilities, for example, are expected to have a very limited impact on growth."
Rachel Reeves attributed expected tax rises to previous governments' post-Brexit trading arrangements and years of austerity, which official forecasters cite as reasons for disappointing productivity. Productivity has been held back by years of poor investment, producing slow improvements and weaker growth that reduce tax receipts and tighten fiscal headroom. External forces such as tariffs and supply-chain disruption have also weighed on growth and inflation, though some shocks were foreseeable and others likely have limited impact. Analysts estimate meeting fiscal rules may require around £30bn of tax rises while recent policy U-turns and payments have reduced flexibility.
Read at www.bbc.com
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