US EditionLabour giveaways risk sparking £30bn tax raid
- Chancellor Rachel Reeves faces mounting fiscal pressure in 2025 due to evaporating headroom and rising costs amid ongoing economic challenges in the UK.
- This pressure stems from a combination of reduced fiscal headroom by about £5 billion since March, demands to increase defense spending, and the impact of Donald Trump's trade war.
- Labour’s planned spending reversals on winter fuel payments and disability cuts, alongside a rise in child poverty, add to an £18 billion Treasury cost, intensifying the fiscal gap.
- Economists warn that slower productivity growth and rising gilt yields near 27-year highs may reduce fiscal room, making a £30 billion tax increase likely despite manifesto pledges not to raise major taxes.
- Reeves faces political and economic risks including pressure from within her party, potential cuts or tax hikes, and the threat of market instability if fiscal rules are loosened.
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'UK already out of fiscal space!': Rachel Reeves warned fiscal rules 'damaging' credibility as £9.9bn cushion vanishes
Chancellor Rachel Reeves is facing mounting pressure on UK public finances as a global bond market sell-off sparked by US debt fears squeezes her fiscal plans. Yields on 30-year gilts are approaching a 27-year high, closing at 5.48 per cent on Friday.UK 10-year gilt yields have risen more than equivalents in any other G7 country except Japan over the past year.With economic growth remaining sluggish, investors warn that Reeves will need to imple…
·London, United Kingdom
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