Chancellor Rachel Reeves will need to come up with billions of pounds more to meet the government’s pre-election promises, according to calculations by influential think tank the Institute for Fiscal Studies (IFS).
Rachel Reeves, the new Chancellor, faces a significant financial challenge as she prepares for her first Budget on October 30, 2024. The Institute for Fiscal Studies (IFS) estimates that she may need to raise up to £25 billion in taxes to maintain public spending levels. This figure includes an anticipated £16 billion tax increase to keep the budget balanced alongside the £9 billion already outlined in Labour’s manifesto
Despite her commitment not to raise income tax, corporation tax, or increase National Insurance or VAT, the necessity for substantial tax hikes remains pressing. The current fiscal environment, characterized by high taxes and rising debt, poses constraints on her plans to fund public services while avoiding austerity
The IFS has warned that any attempt to balance the budget will likely be "on a knife edge," sensitive to judgments from the Office for Budget Responsibility
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