Rachel Reeves faces increasing pressure to either raise taxes or implement deeper spending cuts following a substantial overshoot in UK borrowing, which reached £151.9 billion. This figure exceeded forecasts by approximately £15 billion, significantly complicating fiscal management amidst global economic pressures and demands for increased defense spending. Economists suggest that Reeves may need to reconsider her fiscal strategy in light of these developments, as previous cut announcements may not provide sufficient flexibility against a deteriorating economic outlook.
Even before recent tariff announcements, the spring statement felt like a stopgap. If the government is serious about increasing defence spending or supporting struggling departments, it will either have to raise taxes or bend the rules.
Public borrowing was overshooting the OBR's forecast even before the influence from the tariff chaos is felt, raising the chances that more tax hikes in the autumn budget will be required.
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