US EditionUK borrowing costs spike on report government to scrap plans to raise income tax
- On Wednesday, Chancellor Rachel Reeves abandoned planned income-tax rises and told the Office for Budget Responsibility, according to the Financial Times, ahead of the Budget.
- Party pressure over the manifesto pledge pushed Reeves to reverse course, as fears of breaking Labour's manifesto pledge and resistance from Cabinet ministers and backbench Labour MPs forced her to abandon income tax rises.
- The yield on ten-year gilts rose, increasing government borrowing costs as investors sold gilts and sterling weakened 0.3 per cent against the dollar.
- The Treasury must now find alternative revenue to cover a deficit approaching £50 billion, with officials preparing revised proposals under tight time pressure, according to reports.
- Market pricing shifts have altered expectations for the Bank of England, and the episode adds to political turbulence around Prime Minister Keir Starmer's administration as officials reassess fiscal strategy.
65 Articles
65 Articles
The dissolution of the Starmerites
Run it up the flagpole and see who salutes. Fly that kite. Flush the bastards out. Pre-emptive, exploratory politics are perfectly sensible, but they always depend on context and timing. In this week of tumult and mild hysteria, after the Keir Starmer “coup” briefing and then the sudden reversal of the previous Rachel Reeves kite-flying about breaking a manifesto commitment on income tax, the conclusion is clear. Nobody saluted. Indeed, there wa…
Fallout From UK Budget Grows
Confusing messages about Britain’s budget are damaging the government’s credibility, according to investors, businesses, and think tanks. Bond prices fell after finance minister Rachel Reeves changed her stance regarding income tax. After suggesting that she might raise income tax to stick to her fiscal plans, a Financial Times report confirmed that she had decided against […] The post Fallout From UK Budget Grows appeared first on Modern Diplom…
Rachel Reeves abandons plans to raise income tax
In recent weeks Rachel Reeves dropped heavy hints that she was about to abandon Labour’s manifesto commitment NOT to put up income tax. The rise would be announced on Budget day in 12 days’ time. But now it seems there’s been a change of direction and no income tax rise will be needed.
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