To avoid violating her self-imposed budgetary limits, British Finance Minister Rachel Reeves is anticipated to raise tens of billions of pounds in taxes in her budget on November 26. This is a major concern for bond investors. On November 4, Reeves stated that each of us must do our bit, raising the possibility of tax increases even though any budget reductions would likely be minimal.
According to British media sources, Reeves is either considering or has been pushed to implement the following measures to close a budget deficit and strengthen safeguards against economic shocks. Reeves has been encouraged by the National Institute of Economic and Social Research, a think tank, to develop tax and spending consolidation plans totalling 50 billion pounds ($67 billion).
Prior to the election last year, Prime Minister Keir Starmer and Reeves declared they would not increase taxes for “working people.” However, on October 29, Starmer declared the economy was worse than anticipated and refused to commit. Reeves may raise an additional 8 billion pounds annually by raising the main income tax rate for all workers by one percentage point, according to an article published in The Guardian on October 23.
On October 29, The Telegraph reported that Reeves was considering a two-pence increase in income tax rates and a comparable reduction in social security contributions. This would earn six billion pounds by raising taxes on seniors, landlords, and independent contractors.
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