Chancellor Reeves Faces £25 Billion Annual Tax Increase

Rachel Reeves, the UK Chancellor, is advised by the Institute for Fiscal Studies (IFS) to raise taxes by £25 billion annually to meet public spending commitments and avoid austerity. This increase is necessary even if fiscal rules are adjusted to permit more borrowing for investment, as this alone would not suffice for public services. Labour's manifesto outlined £9 billion in tax increases, but further hikes are required to avoid cuts. Reeves has pledged not to raise income, corporation, or National Insurance taxes, making the target challenging, with speculation about potential levies on pensions, capital gains, and inheritance. The IFS warns of potential market instability if borrowing is seen as excessive, echoing concerns of financial missteps akin to previous issues. The upcoming budget on October 30, 2024, is described as potentially the most consequential since 2010, with implications for the UK's tax burden reaching a peacetime high.