The National Institute of Economic and Social Research warns that the UK government is set to miss Chancellor Rachel Reeves's borrowing targets by 41.2bn. This shortfall necessitates a moderate and sustained increase in taxes, particularly through reforming the council tax system. Despite the government’s stance of focusing on economic growth to strengthen public finances, pressures are mounting for Reeves to either raise taxes or cut spending in the upcoming October Budget. These actions are deemed essential to uphold her self-imposed fiscal rules and ensure financial stability.
Niesr recommends a moderate but sustained increase in taxes, including reforming the council tax system, to address a 41.2bn shortfall in government finances.
Chancellor Rachel Reeves's two borrowing rules include paying day-to-day spending from tax revenue and reducing debt as a share of national income over five years.
Stephen Millard emphasizes that Reeves must either raise taxes or cut spending to comply with her fiscal rules in the upcoming October Budget.
Niesr believes that raising taxes would create a safety net for investors regarding UK public finances stability, potentially decreasing government borrowing costs.
#taxes #chancellor-rachel-reeves #public-finances #economic-policy #national-institute-of-economic-and-social-research
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