I hope Rachel Reeves does raise income tax there's a way she can do it fairly | Ruth Curtice

"There might be three weeks to go until Rachel Reeves presents her budget, but in the topsy-turvy wonderland of the budget process, the real drama happens in the next few days. The chancellor will have to submit her major decisions to her official forecaster, the Office for Budget Responsibility (OBR), this week. This means no more discussion, debate and seat-switching between No 10 and No 11 once the spreadsheet is sent it is rarely changed."

"I hope that it includes an increase in the basic rate of income tax, something we haven't seen since the 1970s. It is hard to see how else Reeves can navigate the three trials of this budget: fixing the bottom line, supporting growth and distributing the pain fairly. First, the hole in the public finances must be filled. New Resolution Foundation analysis estimates that borrowing is on course to be 14bn higher than it was in March enough to break her fiscal rules."

Major budget decisions must be submitted to the OBR this week, locking in forecasts and limiting later changes. A basic-rate income tax increase is proposed as a likely move to address fiscal strain. Borrowing is estimated £14bn higher than in March, threatening fiscal rules and requiring a larger buffer to reassure markets. Chancellors typically under-react to worse forecasts; only George Osborne in 2012 offset deterioration more than needed. The budget must also pursue pro-growth policies because the OBR expects persistent post-crisis stagnation. Government policy aiming to reverse stagnation is necessary to reduce borrowing pressure.

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