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Keir Starmer fails to rule out more tax rises to plug black hole

UNITED KINGDOM, AUG 7 – Labour faces a £51 billion shortfall by 2029/30 due to economic challenges, forcing Chancellor Rachel Reeves to consider tax rises or spending cuts, economists warn.

  • Facing a looming public finances shortfall, Sir Keir Starmer refused to rule out further tax increases in the upcoming autumn Budget.
  • The National Institute of Economic and Social Research warned that Chancellor Rachel Reeves must find over �51 billion annually by 2029/30 to meet Labour’s fiscal rules, after eroded economic headroom.
  • According to NIESR, inflation will average 3.5% in 2025 and stay at 3% into 2026, with the Bank of England expected to cut interest rates twice more this year.
  • Amid the pressure, Rachel Reeves, Chancellor of the Exchequer, may have to make 'moderate but sustained' tax increases unless significant spending cuts are introduced, as she faces an 'impossible trilemma'.
  • With the autumn Budget, speculation suggests the Government may boost revenues with a wealth tax, but Culture Secretary Lisa Nandy ruled it out despite warnings of a 40 billion shortfall.
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Nation.Cymru broke the news in Wales, United Kingdom on Wednesday, August 6, 2025.
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