British government sources revealed that Rachel Reeves, the new Finance Minister, will announce, today, Wednesday, what may be the largest tax increases in three decades, in an attempt to reform the country’s public services. She will also reveal plans for additional borrowing worth billions of pounds to reform the economy.
According to the French agency, the sources added that Reeves is planning financial measures worth 40 billion pounds ($52 billion), most of which are tax increases, to fulfill her pledge to cover daily spending.
She indicated that in addition to increasing taxes to cover daily spending, Reeves will try to reassure investors that the expected increase in borrowing for public investment by about 20 billion pounds sterling will be positive for the sixth largest economy in the world.
In an excerpt from her budget speech that was shared with the media yesterday, Reeves said that the previous Conservative government left an undisclosed gap in public finances of 22 billion pounds, considering that the only way to drive economic growth is investment, saying: “In order to… “In order for us to realize this investment, we must restore economic stability.”
According to the Institute for Fiscal Studies, a think tank, tax increases of £40 billion would be equivalent to 1.25% of economic output, which has only been exceeded in modern history in 1993 by the Conservative government’s budget, which raised taxes to support public finances after a recession. And a currency crisis.
The Labor government is betting that its first budget after 14 years of Conservative Party rule will be able to finance its election pledges without causing the kind of chaos in the bond market that toppled former Prime Minister Liz Truss in 2022. The party has promised voters that it will work to reduce the electoral lists. Long waits in state-run health services, building more housing and improving schools.
Four months after the election, Prime Minister Keir Starmer said those who could afford would have to pay more in tax under the budget plan that Reeves will announce to Parliament today.
