Keir Starmer (AP image)
Rachel Reeves, Britain’s top economic official, announced a set of tax increases on Wednesday as she sought to strengthen the country’s public finances in the face of a challenging economy.In her second annual budget, Reeves, the chancellor of the Exchequer, said she would raise taxes by nearly 26 billion pounds ($34 billion) by 2030, mostly via policies related to personal income taxes. Last year, Reeves raised taxes by about 40 billion pounds and said she didn’t want to repeat such a budget.The need to raise taxes again came in response to forecasts for slower economic growth, a push for more welfare spending, and Reeves’ commitment on lowering debt. In her favor, the economic projections were not as bad as many analysts had expected, allowing Reeves to sidestep some of the tougher economic choices that economists thought she might face.Broadly, Reeves used the latest budget to shift the economic burden onto wealthier people and away from low-income families and the young. “These are my choices,” Reeves said. “Not austerity. Not reckless borrowing. Not turning a blind eye to unfairness. My choice is a budget for fair taxes, strong public services and a stable economy.”Wednesday’s budget was a critical test for the government. Despite a landslide election victory last year, Reeves and Prime Minister Keir Starmer have seen their approval ratings sink to record lows over their 16 months in power. Reeves has faced an arduous economic environment – with slow growth, high debt, high interest rates and global upheaval – and she has struggled to win over voters and some members of her own Labour Party, while also appeasing anxious bond investors.Since taking office, Reeves has said she was seeking to put Britain’s finances on a “firmer footing.” She has also prioritized funneling more money toward public services and capital investment projects. But those plans have been constrained by her own “ironclad” promises on reducing debt and promises to not raise certain taxes on working people.The budget met its objectives in narrow terms, said Michael Saunders, an economist at Oxford Economics. But in other respects, “it looks less reassuring,” he said, since it lacked measures to promote sustained growth and increased public spending. That “reinforces the impression that govt is unwilling to take difficult decisions,” he added.Reacting to Reeves’ speech, Kemi Badenoch, the leader of the opposition Conservative Party, said the budget measures had broken the chancellor’s previous promises on taxes, and represented a “total humiliation.” NYT
