Reeves aims to prepare voters and markets for possible budget tax rises

"As she made clear, though only obliquely, Keir Starmer's government is considering abandoning its pre-election pledge not to raise income tax, backed into a corner by dire forecasts from the Office for Budget Responsibility (OBR). Reeves hoped to explain to the public why that was necessary by pointing to the punishing costs of allowing public debt to keep rising and to convince investors she is determined to wrestle the public finances under control."

"It is extremely rare for chancellors to haul in journalists for a formal speech less than three weeks before a budget. But Reeves and her team are acutely conscious of how difficult a communications challenge they have ahead of them. Reeves had hoped to stick to Labour's manifesto pledges not to touch income tax, VAT or national insurance, reaching instead for progressive reforms of the tax system that would raise more from those with the broadest shoulders."

"With the OBR downgrade to productivity forecasts knocking Reeves's tax and spending plans off track by perhaps 20bn, she used her speech to blame long-term policy failures in particular stop-go investment for the UK's weak performance. Years of economic mismanagement have limited our country's potential, she said. From George Osborne's austerity project after 2010, through the rushed and ill-conceived Brexit deal and the lack of preparedness for Covid, this part"

The government faces pressure to break a pre-election pledge not to raise income tax, VAT, or national insurance following a major OBR downgrade to productivity and fiscal forecasts. The downgrade may create roughly a £20bn gap in tax and spending plans, prompting consideration of income tax increases or progressive reforms targeting higher earners. Officials argue that rising public debt risks investor confidence and requires decisive action to control the public finances. The fiscal shortfall is attributed to long-term policy failures, including stop‑start investment, austerity after 2010, the Brexit deal, and pandemic unpreparedness. Communications and intra-party politics complicate preparations for the autumn budget.

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